kaal:claim:1908473-012

Because contingent capital is a hybrid instrument that pays fixed returns while bearing equity like risk, it may receive low or no ratings, attract a much smaller investor base, and carry higher funding costs.

As a hybrid security, contingent capital may receive low or no ratings and may have a much smaller investor base and higher costs of funding.

Wulf A. Kaal, Christoph Henkel, Contingent Capital with Sequential Triggers (2011), II.B. Limitations and Open Issues, p. 21
https://ssrn.com/abstract=1908473 · source PDF

Wulf A. Kaal, Christoph Henkel, Contingent Capital with Sequential Triggers (2011). SSRN: https://ssrn.com/abstract=1908473

• Holds while rating methodologies for hybrid contingent instruments remain unsettled

failuresupport: arguedfailure: hybrid-rating-penaltyfamily: liquidity-and-market-structure-failuresecurities-law

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