Fixed-Rate Capital Securities

A security issued by a corporation that has a $25 par value (although some are issued with a $1,000 par value) and offers investors a combination of the features ofcorporate bonds and pferred stock.These securities providethe benefits of attractive yields, fixed monthly, quarterly or semiannual income, investment time frames that are generally pdictable (20-49 years, although some are perpetual), liquidity and investment-grade credit quality (in most cases).

|||Unlike common and pferred stock pidends, the distributions made on fixed-rate capital securities are fully tax-deductible for the issuer, just like the interest payments on traditional debt instruments.Rating agencies have taken a positive view of this financing tool for the issuer, because it provides long-term capital and permits the deferral of payments should the issuer experience financial difficulties. However, as with pferred stock, such deferrals can only occur if the parent company stops all other stock pidend payments.