In January, underwriters and issuers were sure innovations in the US FIG hybrid market would prompt a flood of new issues in 2006. Five months on, that flood is a trickle after NAIC classification concerns significantly stalled the infant market, resulting in a stand-off. There are a lot of disgruntled bankers, issuers and investors in the US hybrid bond market right now. The reason is not that this product could blow up when the credit cycle turns, although there are plenty of investors who consider these deals to be a bull market trade. It's not a corporate problem either - only $2bn of US corporate deals have been issued to date.
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