Standard & Poor's is changing the way it assigns ratings to hybrid securities that include both equity and debt, the company said Thursday.

The changes mostly affect preferred stock, which will carry new ratings that reflect 40% common equity. S&P had considered such securities to carry 75% equity.

S&P said it now views preferred stock as a debt security rather than an equity security. The change does not affect insurance companies and banks.

In announcing the move, S&P said its previous equity rating was "overly generous" because there were a number of factors involved in hybrid securities that were not being counted fairly.

The New York-based ratings firm said the change is not likely to alter the ratings of many hybrid securities.

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