The Japanese market has recently been witnessing greater activity in the issuance of hybrid securities by the financial and non-financial sectors, the latter having been less common in the past.
Hybrid securities, generally defined as securities with characteristics of both debt and equity, have been popular since the nineties among Japanese financial institutions as a tool for raising regulatory capital. They are still active issuers of hybrids for their capital needs, particularly in connection with the recent capital crisis.
In the past few years, however, non-financial firms have been also active in issuing hybrid securities. For example: ¥31 billion ($333 million) by AEON Co, Ltd in September 2006, ¥300 billion by Nippon Steel Corporation in November 2006, ¥120 billion by Sumitomo Realty & Development Co, Ltd in February 2008 and ¥300 billion by JFE Holdings, Inc in March 2008.
In addition, leveraged buyouts are one of the...