Euro corporate hybrid bonds - To stay over the cycle

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The Euro corporate hybrid bond market has evolved exceptionally well since 2013, reaching a total market size of circa €85bn as of today, having become a well accepted, fairly standardised source of funding for many corporates. Featuring debt and equity characteristics alike, hybrids offer accounting, rating as well as tax benefits and create economic value for issuers. For investors, hybrids offer a welcome opportunity to diversify their investment portfolio and increase average return, but inherent risk should be eyed carefully.