The most common “hybrid” securities are convertible bonds, a structure which incorporates equity conversion rights into a debt instrument to materially reduce a given company’s fixed cost of borrowing (interest rate). The conversion price and conditions under which such right(s) may be exercised are significant components of value in the instrument and typically struck at a meaningful premium to the stock price at issuance.

We believe a company’s ability to select the most appropriate, cost-efficient financing vehicle begins with its ability to comprehensively analyze the alternatives at its disposal. This requires an understanding of all facets of the instruments under consideration – their “all-in” cost of capital – as well as market dynamics and the perspective of investors in the asset class. This is particularly complex in the context of equity-linked and derivative securities, which can be highly tailored to a company’s needs, but require great proficiency to assess. We also understand each transaction a company does influences the cost and breadth of alternatives available to it going forward.

At Aequitas, we provide our clients with product expertise and perspective acquired through decades of capital markets experience to knowledgeably evaluate and execute financing strategies, minimizing their cost of capital today and preserving their optionality for tomorrow.