posted on 06-06-2019


Updated October 1, 2019

What is a Kicker?

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

How Does a Kicker Work?

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 Does a Kicker Matter?

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.