Hybrid debt issuance in Europe is poised to reach its largest annual volume in four years amid strong investor demand and favorable financing conditions, Scope Ratings said in a report.
European hybrid bond issuance reached nearly €21.2 billion in the first nine months of 2019, almost matching the level seen in full-year 2018 when companies issued €22.2 billion in hybrid debt.
Chipmaker Infineon Technologies AG and rail operator Deutsche Bahn AG made their debut in the hybrid bond market in October, bringing the year-to-date volumes to more than €24 billion, the highest level since 2015 when full-year issuance exceeded €30 billion.
Scope Ratings said low interest rates and the European Central Bank's decision to restart quantitative easing scheme could further drive hybrid debt issuance.
"Tighter credit spreads amid falling sovereign bond yields have also lured new issuers to the hybrid market," the rating agency added.