What are income deposit securities?
IDSs are a new type of security debuting in the U.S. on the Amex. While new issues will vary, the following features and benefits will generally be applicable to all IDSs: Designed to pay monthly income IDSs are designed to pay a monthly income stream based on interest payments on the notes and dividend income, if any, on the common stock. Designed to distribute nearly all free cash flow IDSs are designed to distribute nearly all of a company’s free cash flow to investors, allowing for the direct flow-through of any dividends and interest income to IDS holders on a monthly basis. Designed for issuers with mature, relatively stable businesses IDSs are ideally suited to issuers with relatively stable businesses that generate significant free cash flow, not high growth companies. A number of internal and external factors could restrict or eliminate an issuers ability to pay interest and principal on the notes, and dividends with respect to shares of common stock represented by IDSs. IDSs
