Published by Gbaf News
Posted on July 20, 2018
4 min readLast updated: January 21, 2026
Hybrid bond issuance in Europe remains on track this year to reach its highest level since 2015 after a busy second quarter marked by a growing diversity of issuers, including real estate and consumer discretionary companies.
With first-half issuance of EUR 14.8bn falling just short of full-year issuance in 2016 and 2017, Scope Rating expects the placement of hybrid-bond issuance this year will likely surpass EUR 20bn.
Low interest rates and still buoyant equity markets remain powerful incentives for capital-intensive companies to issue the subordinated bonds, which blend the characteristics of debt and equity instruments, to help finance acquisitions and refinance maturing issues.
“Deal making is very much still underway in Europe, with corporate finance chiefs the most enthusiastic that they’ve been since 2015 about using hybrid bonds to fund expansion without jeopardising their credit ratings,” says Scope analyst Azza Chammem.
One caveat is the importance of bullish equity-market sentiment persisting for hybrid bonds to retain their appeal as a funding instrument while interest rates remain low, she says.
Several debutants from the real estate sector such as Swedish Klovern, Luxemburg based CPI Property Group or French-Dutch Unibail-Rodamco came to market with hybrid issues which have long been a preferred source of funding for power utilities and telecoms firms.
Scope has identified the following trends in the hybrid market segment in the first half:
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Hybrid bond issuance in Europe remains on track this year to reach its highest level since 2015 after a busy second quarter marked by a growing diversity of issuers, including real estate and consumer discretionary companies.
With first-half issuance of EUR 14.8bn falling just short of full-year issuance in 2016 and 2017, Scope Rating expects the placement of hybrid-bond issuance this year will likely surpass EUR 20bn.
Low interest rates and still buoyant equity markets remain powerful incentives for capital-intensive companies to issue the subordinated bonds, which blend the characteristics of debt and equity instruments, to help finance acquisitions and refinance maturing issues.
“Deal making is very much still underway in Europe, with corporate finance chiefs the most enthusiastic that they’ve been since 2015 about using hybrid bonds to fund expansion without jeopardising their credit ratings,” says Scope analyst Azza Chammem.
One caveat is the importance of bullish equity-market sentiment persisting for hybrid bonds to retain their appeal as a funding instrument while interest rates remain low, she says.
Several debutants from the real estate sector such as Swedish Klovern, Luxemburg based CPI Property Group or French-Dutch Unibail-Rodamco came to market with hybrid issues which have long been a preferred source of funding for power utilities and telecoms firms.
Scope has identified the following trends in the hybrid market segment in the first half:
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