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Executive Summary

• We recently met with a client who remarked that everyone and his dog is buying into hybrids, and as new investors are looking at the asset class we have received a few requests for a basic hybrid document – a Hybrids 101. This is that document.
• We touch a little on relative value considerations but this is not a picks and pans comment. The largest single hybrid issuing sector is the utilities sector but this comment is not specifically utilities based and provides a general overview of the structure, rating methodology and rationale around corporate hybrids.
• This comment is intended as a starting reference point for those looking to learn more about hybrids. It is fairly comprehensive but there are bound to be individual questions that are not addressed, and we urge any clients who want additional information to use the Ask An Analyst function.
• The first thing we always say to clients considering an investment in hybrids is that all of the instrument optionality is with the issuer and as an investor you have almost none of the rights typically given to bondholders. You are very dependent on the issuer acting in a responsible way, and, while documentation is relatively standardised there can be small differences which investors need to recognise and acknowledge.
• This comment is our understanding of hybrids as at 26 March 2026 and it is very possible that methodology or structuring changes made after this date could bring significant differences in the future.