Connect with us

Popular World News

Bankers call for ‘hybrid’ shares to plug COVID corporate capital gap By Reuters

Oilfield firm Weatherford International files bankruptcy plan


Bankers call for ‘hybrid’ shares to plug COVID corporate capital gap By Reuters

By Huw Jones LONDON (Reuters) – European companies hit by COVID-19 could issue “hybrid” shares to plug a predicted capital gap of up to 600 billion euros ($723.48 billion) when government relief measures expire as vaccination programmes are rolled out, a report said on Tuesday. The report compiled by consultants PwC and the Association for Financial Markets in Europe (AFME), which represents banks and other market participants, said economic recovery is under threat unless the capital gap is bridged. It proposes a new European-Union-wide hybrid security like preferred shares, a form of stock that has features of ordinary shares and bonds, typically offering a priority in dividend payments but with no voting rights. “This is where hybrid and equity markets can play a key role in supporting Europe’s recovery,” AFME CEO Adam Farkas said in a statement. Despite relief from governments and the private sector since the start of the pandemic, 10% of European companies have cash reserves to only last six months, the report said. The EU has already passed a package of “quick fix” measures to make it more attractive for companies to rebuild their finances by issuing shares on the stock market rather than the more common route of taking on debt such as bank loans. But many mid-sized and SME corporates do not want to give up control of their business by issuing ordinary shares, the report said, and are willing to pay a premium not to dilute their voting rights. “Hybrid instruments are ideally suited to address these needs,” it said. Policymakers could also explore further use of dual class shares to address the control concerns of companies, as well as debt for equity swaps to reduce leverage, the report said. ($1 = 0.8293 euros)
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

Source link

Continue Reading
You may also like...
Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *


To Top
error: Content is protected !!