hard · Debt Capital Markets bond-instruments-structures

Where do 'Corporate Hybrid' bonds typically sit on the debt-to-equity continuum, and what is a primary reason for their issuance?

1. They are identical to common equity in every respect but simply carry a fixed maturity.
2. Below common equity in the stack; used to deliver a tax-free dividend stream to the investors.
3. Ranking above senior secured debt; issued mainly to reduce the company's total interest expense.
4. Between subordinated debt and common equity; used to gain 'equity credit' from rating agencies.

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