Hybrid debt is a generic catch-all phrase for capital that has both equity and debt-like characteristics. There is no standard definition in place to tell whether "hybrid debt" is counted as debt or equity. If the security is paying interest and is taxed at the corporate earnings level then that would be more debt-like. If it is structured as a preferred investment (or better yet convertible-preferred) and is paying a preferred dividend to noteholders that would be more equity like. The concept of "equity credit" comes into play for hybrids. Depending on the characteristics, so-called hybrids could receive a spectrum of equity credit ranging from 25%, 50% and so on. The concept of equity credit is most relevant when it comes to how credit rating agencies (Moody's, S&P, Fitch) are thinking about the capital structure and crediworthiness of company. Also, it would be important for definition purposes in credit agreements governing other layers of the capital structure and the covenants found therein. Hope that helps.