A category (or issue) of a mandatory convertible (a trust preferred) that is embedded with a mandatory conversion feature, backed by certain collateral such as treasury securities. It belongs to a broader class of equity-linked securities that bear a number of contingent features whereby such securities have a hybrid status.
The issuers of these equity-linked securities generally buy and hold an amount of stripped treasury securities maturing on a quarterly basis through the conversion date, and a forward purchase contract of certain common shares with an existing shareholder. Quarterly distributions (in monetary terms) on such equity-linked securities are usually drawn from the treasury securities and such equity- linked securities are not entitled to any dividends that may be paid to the related common stock.
This name was used by Donaldson. Trust enhanced dividend securities (TrENDS or TRENDS) are known by other names such as ACES (automatic common exchange securities) (as used by Goldman Sachs).
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