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.
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Bank of Cyprus Holdings, the LSE and CSE-listed parent of the island's biggest lender, has received the green light from the Irish authorities to issue EUR 220 mln in fixed-rate capital securities, carrying an initial 12.5% coupon renewable every five years.
the capital notes and the fixed-rate capital securities issued by
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