Capital notes are debt securities that have equity-like features. Examples include:
Perpetual debt securities - with no fixed maturity date. They are generally regarded as hybrid securities because they are a debt security with equity-like features (like a share, they don’t mature).
Subordinated debt securities - whose rights with respect to payment of interest and repayment of principal are subordinated to another class or classes of debt. The subordination may be in favour of the holders of senior debt or to ordinary creditors generally. They are generally regarded as hybrid securities because they are a debt security with equity-like features (like a share, they rank behind certain debts in a winding up).
Knock-out debt securities - give the issuer or a third party (such as a prudential regulator like APRA) a right to extinguish them under certain conditions. They are typically issued by banks or other prudentially-regulated companies and have terms and conditions attached so that they are treated like capital, or given a particular risk weighting, by prudential regulators. They are generally regarded as hybrid securities because they are a debt security with equity-like features (in certain circumstances, like a share, they have no right to a return of capital).