Fixed-Rate Capital Security

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Fixed-Rate Capital Security

A security that combines features of bonds and preferred stock. Fixed-rate capital securities provide the holder with a fixed coupon with payments on a regular basis, and like bonds, these coupons are tax deductible for the issuer. Likewise, most have a maturity date and are fairly liquid. However, like preferred stock, the issuer may suspend payments on fixed-rate capital securities when it is having cash flow problems, though only if it also stops all dividend payments on stock. Because of these features, fixed-rate capital securities are fairly low risk investments.
References in periodicals archive ?
NEW YORK -- Fitch assigns a long-term rating of 'A' to the $1 billion of fixed rate capital securities, issued by JPMorgan Chase Capital XXII, a Delaware statutory trust.