Converting preference shares: an Australian capital structure innovation

Article Abstract:

Converting preference shares (prefs) are a hybrid security involving mandatory conversion into a fixed value of ordinary shares (although some issues have an option-like conversion value payoff). This paper explains how prefs can be viewed as equivalent to an ordinary share issue plus a swap contract between "old" and "new" shareholders. This perspective is used to illustrate why prefs financing may be chosen when significant information asymmetries exist between management and outside investors. Other factors motivating the use of prefs are examined and their relevance for particular issuers and for the specific design of prefs securities analyzed. (Reprinted by permission of the publisher.)

Convertible securities, Preferred stocks, Hybrid instruments (Finance), Hybrid instruments (Securities)

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Australian and US interest rate swap markets: comparison and linkages

Article Abstract:

A comparative study is conducted on United States' and Australian swap markets to analyze the interest rate swap spreads and linkage between these markets.

United States, Comparative analysis, World market, International markets

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Can the choice of interpolation method explain the difference between swap prices and futures prices?

Article Abstract:

The article uses interpolation methods to examine volatility in interest rate swaps.

Forecasts, trends, outlooks, Methods, Forecasts and trends, Interpolation, Market trend/market analysis

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