Thomson has the right to hold back coupon — even if it looks ugly

The hybrid corporate bond market was, up until the credit crunch, gaining increasing popularity. For issuers, it offered the possibility of raising equity-like instruments at competitive costs while for investors it meant juicy spreads and apparently little risk. Times, however, have changed and with the crunch biting, it’s not just the banks that have suffered, some corporates are finding themselves in a tricky corner, and suddenly those hybrids are starting to look a little bit ugly. However, no investor can say that they had not been warned. Flexibility was always going to be what these instruments were there for.