A hybrid debt instrument (having the geatures of both debt and equity) that pays a fixed coupon or a specific spread up until the so-called step-up date. The issuer of step-up securities attempt to project them as equity by getting equity credit from rating agencies. The securities are generally subordinated (they rank below other debt), non-cumulative, and unsecured debt instruments. The issuer can redeem them by a specified date, the coupon may step-up to a higher rate (this step-up rate is fixed prior to the issue date).
February 22, 2025
