THE PUBLIC MEZZANINE CAPITAL: FEASIBILITY STUDY
A growing number of financial institutions are unable to raise the required amount of equity and have to raise their own funds by means of public mezzanine. If these problems continue, the role of hybrids may become more significant, as they may be considered as a replacement of common equity for th...
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| Format: | Article |
| Language: | Russian |
| Published: |
Government of the Russian Federation, Financial University
2017-10-01
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| Series: | Финансы: теория и практика |
| Subjects: | |
| Online Access: | https://financetp.fa.ru/jour/article/view/310 |
| _version_ | 1826565365883207680 |
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| author | E. O. Stepanova |
| author_facet | E. O. Stepanova |
| author_sort | E. O. Stepanova |
| collection | DOAJ |
| description | A growing number of financial institutions are unable to raise the required amount of equity and have to raise their own funds by means of public mezzanine. If these problems continue, the role of hybrids may become more significant, as they may be considered as a replacement of common equity for the purpose of counter-cyclical buffers, capital surcharges and so on. Thus, the importance of mezzanine capital for the financial system is already established and has a potential for further growth, while regulatory aspects and risk assessment of these relatively new instruments remain unsolved. In the article, the author analyses key regulatory concerns of Basel Accords in regards to mezzanine instruments, assesses the methodology of rating agencies to evaluate the risks incorporated in hybrid securities and compares the risk profiles of traditional convertible and recently developed contingent convertible bonds. The results articulate that measures applied by both Basel Committee members and rating agencies (Fitch, Moody’s, etc.) are not sufficient to manage risks incorporated in hybrid securities. The latter may contribute to the growth of financial failures we have observed in recent years. |
| first_indexed | 2024-04-10T02:39:13Z |
| format | Article |
| id | doaj.art-99056af3d5824e6288c714491942e8d8 |
| institution | Directory Open Access Journal |
| issn | 2587-5671 2587-7089 |
| language | Russian |
| last_indexed | 2025-03-14T10:34:36Z |
| publishDate | 2017-10-01 |
| publisher | Government of the Russian Federation, Financial University |
| record_format | Article |
| series | Финансы: теория и практика |
| spelling | doaj.art-99056af3d5824e6288c714491942e8d82025-03-02T11:01:56ZrusGovernment of the Russian Federation, Financial UniversityФинансы: теория и практика2587-56712587-70892017-10-012069610710.26794/2587-5671-2016-20-6-96-107347THE PUBLIC MEZZANINE CAPITAL: FEASIBILITY STUDYE. O. Stepanova0National Research Institute “Higher School of Economics”A growing number of financial institutions are unable to raise the required amount of equity and have to raise their own funds by means of public mezzanine. If these problems continue, the role of hybrids may become more significant, as they may be considered as a replacement of common equity for the purpose of counter-cyclical buffers, capital surcharges and so on. Thus, the importance of mezzanine capital for the financial system is already established and has a potential for further growth, while regulatory aspects and risk assessment of these relatively new instruments remain unsolved. In the article, the author analyses key regulatory concerns of Basel Accords in regards to mezzanine instruments, assesses the methodology of rating agencies to evaluate the risks incorporated in hybrid securities and compares the risk profiles of traditional convertible and recently developed contingent convertible bonds. The results articulate that measures applied by both Basel Committee members and rating agencies (Fitch, Moody’s, etc.) are not sufficient to manage risks incorporated in hybrid securities. The latter may contribute to the growth of financial failures we have observed in recent years.https://financetp.fa.ru/jour/article/view/310mezzanine financingmezzanine debthybrid securitiescontingent convertiblesinvestmentfinancial instruments |
| spellingShingle | E. O. Stepanova THE PUBLIC MEZZANINE CAPITAL: FEASIBILITY STUDY Финансы: теория и практика mezzanine financing mezzanine debt hybrid securities contingent convertibles investment financial instruments |
| title | THE PUBLIC MEZZANINE CAPITAL: FEASIBILITY STUDY |
| title_full | THE PUBLIC MEZZANINE CAPITAL: FEASIBILITY STUDY |
| title_fullStr | THE PUBLIC MEZZANINE CAPITAL: FEASIBILITY STUDY |
| title_full_unstemmed | THE PUBLIC MEZZANINE CAPITAL: FEASIBILITY STUDY |
| title_short | THE PUBLIC MEZZANINE CAPITAL: FEASIBILITY STUDY |
| title_sort | public mezzanine capital feasibility study |
| topic | mezzanine financing mezzanine debt hybrid securities contingent convertibles investment financial instruments |
| url | https://financetp.fa.ru/jour/article/view/310 |
| work_keys_str_mv | AT eostepanova thepublicmezzaninecapitalfeasibilitystudy AT eostepanova publicmezzaninecapitalfeasibilitystudy |