Hybrid Instruments
Contingent convertibles, preferred shares, and regulatory capital instruments
Hybrid Instruments
Executive Summary
Hybrid instruments sit between debt and equity—CoCos, AT1, preferred shares, and regulatory capital securities. Issuers use them for capital structure and regulatory capital (Basel III, Solvency II); investors take subordination and conversion risk for yield. For practitioners in capital markets and risk, structure and trigger mechanics are essential; for consultants advising on capital issuance, valuation, or regulatory treatment, the ability to explain tiers, loss absorption, and CoCo triggers in clear terms supports credible delivery and value for money—and the depth that strengthens book and training offerings. This manual explores the diverse universe of hybrid securities with particular focus on regulatory capital instruments, contingent convertibles, and preferred shares, examining their structures, valuation approaches, risk profiles, and market applications.