  We study the spectral properties of the first 14 observations of the rise to
outburst phase of the X-ray transient J1550-564. Using the PCA and HEXTE
instruments, we find that the 3-200 keV spectra smoothly pass from a standard
low/hard state to a very high state. The classic high state is never
encountered possibly indicating that it is not a phenomenon of the rise phase.
We find that the individual PCA spectra can be fitted adequately by a disk
black body and a thermal Comptonization model which includes reflection. Once
the very high state is reached there is clear spectral curvature of the
continuum which possibly indicates the presence of a composite
thermal/non-thermal plasma. Detailed modelling of the reflection parameters
shows a sharp increase in mean ionization at the onset of the transition
between the low state and very high state. There is a related variability in
the reflected fraction but its exact value depends on the continuum model used.
We can constrain the inner radius using relativistic smearing and while there
are large uncertainties, the data are incompatible with a disk extending to the
last stable orbit in either state. Since the system is on the rise to outburst,
the disk instability models strongly imply that there is no standard inner disk
at the time the low state spectrum is observed. This is compatible with a
truncated disk, filled by an X-ray hot, advection dominated accretion flow.
However, magnetic flares above the outbursting disk can also match the observed
spectra once the effects of either outflow and/or strong photoionization of the
surface of the disk are included.
