Corporate hybrids: No longer an asset class to ignore?

Neuberger Berman's Julian Marks explores the growth of corporate hybrids, which have seen some 300% growth in the past two years alone

When an apparently sleepy, decade-old market suddenly explodes into life, it is natural to ask what that means for investors. That is what happened to non-financial corporate hybrid securities during 2013-2014 when, after seven years edging its way towards $20bn, the market exploded by well over 300%. Today, 57 companies have issued more than $120bn worth of notes, with the potential market size being seen as anything up to $800bn. Corporate hybrid debt has characteristics of both debt and equity. It is subordinate to senior debt, but it is senior to equity. It pays coupons, but th...