Investing Answers Building and Protecting Your Wealth through Education Publisher of The Next Banks That Could Fail
Investing Answers Building and Protecting Your Wealth through Education Publisher of The Next Banks That Could Fail

Kicker

What it is:

In the finance world, a kicker is a feature that makes a security more attractive.

How it works (Example):

Often, kickers are equity kickers, which are the right but not the obligation to buy shares of the issuer of a bond. These equity kickers come with the bond, making them more saleable to investors.

Sometimes, kickers aren't useful. For instance, they might offer the bondholder the right to buy shares at $8 a share, which only comes in handy if the shares are trading above $8. In those cases, the bond issuer might increase the coupon rate instead.

Why it Matters:

Kickers get deals done. They make securities more saleable, and they help companies raise the capital they need to raise to grow. For investors, kickers can raise the gains or profits they might earn on a security.