It's been a while since I posted, so I figure I would post a story about ArcerlorMittal and their Hybrid security.
For those monkeys who don't know a Hybrid security is, its a security that works and looks like a bond (usually a perpetual bond), but for accounting purposes it counts (partially or in full) as equity.
ArcelorMittal had an outstanding High Yield Hybrid bond that was perpetual and had a coupon of 8.75%. This particular security was very attractive for investors due to its floating reset after its first call, which was in 2018.
Before January 20, this bond was trading in the 108-110 range. However, this bond had a very important caveat: A Rating Agency Event.
Hidden in Page 51 of the prospectus of this security, There is a short explanation of what a Rating Agency Event is. Basically, if one of the rating agencies (Moody's, Fitch, S&P) changes the way they apply equity treatment to the hybrid, Arcelor has the right to call the security at 101.