Hybrid bond mart in uproar as NAIC rules Ecaps equity
The US's red-hot hybrid capital securities market was knocked sideways this week when the National Association of Insurance Commissioners, which regulates how insurance companies invest, suddenly and inexplicably decided to redesignate one of the most debt-like structures as common equity.
Hybrid capital spreads across the board blew out 10bp on news that the $300m deal Lehman Brothers issued last August, introducing a structure it called Enhanced Capital Advantaged Preferred Securities (Ecaps), had been redesignated as an instrument equivalent to common equity.
The decision was made by the NAIC's Securities
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