Hybrid Capital - Pricing and Use from the Issuers and Investors Point of View

Hybrid Capital - Pricing and Use from the Issuers and Investors Point of View

The Genuss-Scheine have a very long tradition in Germany. They give the non-shareholder some typical shareholder rights, as participation in profit, liquidation proceeds, or assets. The Genuss-Scheine are, therewith, a special form of the hybrid capital (also called mezzanine capital), because they feature both the equity and debt characteristics. The project contains a comprehending analysis and a pricing of all important forms of hybrid capital from the issuers and investors point of view. Especially, the development of the pricing formulas and the behaviour of the fair quotations of the hybrid capital will be studied. The project consists of two main parts. At first, the fundamental description of the different types of the hybrid capital and the widespread market survey will be considered. Additionally, the relevant capital market aspects, the balancing questions (German Commercial Code, IAS), and the implications on the Basle II rules will be discussed. The second part consists of the developing of the pricing models, the analysis of the theoretical changes of value on the basis of different scenarios of the development of an issuing company, and the discussion of the risk and profit contribution to the standard investment portfolio. The project aims to answer some scientific and practical relevant questions: particularly, how to design the characteristics of the product which are relevant especially from the issuers and investors point of view, and how to determine the fair price. Therewith, the project should contribute to the standardisation of the hybrid capital market.

Project members

Michael Schröder

Michael Schröder

Project Coordinator
Senior Researcher

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Contact

Senior Researcher
Dr. Michael Schröder
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