Recently, as a financing method, companies have been using mezzanine finance which is located midway between debt (i.e. bank loans and corporate bonds) and capital (common stock).
Hybrid finance is represented by a subordinated bond or a subordinated loan categorized as mezzanine finance, being qualified as capital by rating agencies. Although it is classified to liabilities in financial statements, it may have an effect that it is qualified as real equity capital, to a certain degree, in the financial analysis by rating agencies.
Recognizing these characteristics, leading European companies are actively using hybrid finance and the market is expanding year by year. In Japan AEON Co., Ltd. and Nippon Steel Corporation issued hybrid bonds in 2006, we expect further expansion of the market.
In addition to the quantitative analysis necessary for decision-making in investments related to hybrid financing, we conduct researches on the pricing and risk analysis of hybrid finance.
Regarding global warming and the Kyoto mechanism, we provide information, make investigations and conduct researches, and offer consulting services. Also, we conduct a research on financial products with respect to emissions trading using a financial engineering technique.
A CAT bond is a securitized product of risks inherent in natural disasters, including earthquakes and hurricanes, and its use has been expanding as a means to provide the issuer with a hedge against those risks, instead of reinsurance, and to offer investors an opportunity for investment diversification. We conduct a research on risk analysis methods in connection with investments in CAT bonds.
