A quasi-equity instrument is an instrument (a hybrid instrument) that possesses and exhibits the features of quasi-equity (QE)- that is, the features (certain features) of both equity and debt, and at times, also specific characteristics such as it confinement to a specific set of assets or business, but not the entire entity (issuer) and its possession of less rights than equity, etc. Features related to equity may include residual interest in the underlying assets or business, while those related to debt may be a maturity date or a put option of redemption, etc.
These instruments rank between senior debt and equity in terms of liquidation priority (the ease with which these instrument can be liquidated).
The main examples of quasi-equity instruments are:
- Perpetual bonds.
- Subordinated loans.
- Convertible debt.
- Participating loans.
- Other instruments with similar features such as SAFE notes.
Comments