Contingent Convertibles

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Welcome to CoCoBonds.com
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This site is intended to be an information platform on contingent capital ("CoCo") bonds and related issues. Although we like to call them capital insurance bonds as they fulfill more of an insurance function.

Capital insurance bonds are debt instruments with the special feature that they will convert mandatorily in ordinary shares or similar instruments of the relevant issuer, mostly banks, when one or more triggers are met. Such a trigger could be for example reaching a certain threshold in the required capital ratio of the bank. In this aspect capital insurance bonds resemble more catastrophe bonds (more on cat bonds under www.HedgeFund-Lawyer.com) than convertible bonds. However, as an emerging asset class there are still no clear market standards visible.

The main purpose of capital insurance bonds is to increase a bank's capital in times of distress. Until then, or if the trigger is never met, capital insurance bonds are normal debt instruments which can count to a bank's core cpital (provided the relevant regulator approves it). Nevertheless, there may be times when a bank will not be obliged to pay interest and forgoe the relevant interest payment, in particular when not sufficient distributable profits have been earned.

We recommend you start by viewing our resources:

  • check out our BookShop for literature on the contingent capital solutions
  • click on our Resources link to learn more

Or you can just read our news on relevant issues.

Please visit also our sponsor www.HedgeFund-Lawyer.com and subscribe to our RSS newsfeed.

Last Updated on Monday, 09 November 2009 23:56
 

New 'CoCo' Bonds May Worsen Financial Crisis Situations - Newsroom America

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New 'CoCo' Bonds May Worsen Financial Crisis Situations
Newsroom America
Since 2009, this has led European banks to increasingly deploy an instrument that allows them to convert debt into equity in times of need: contingent convertible bonds, also known as CoCo bonds. Banks issue these bonds at fixed interest rates – as is ...

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Indian regulator warns against novel bond structure - Reuters

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Indian regulator warns against novel bond structure
Reuters
The RBI sent out a reminder to banks on November 25 warning them that issuers are not allowed to provide guarantees or create contingent liabilities for borrowing by offshore units, or use funds onshore that have been raised offshore in such structures ...

and more »
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RBI warns against novel bond structure - Hindu Business Line

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RBI warns against novel bond structure
Hindu Business Line
The RBI sent out a reminder to banks on November 25 warning them that issuers are not allowed to provide guarantees or create contingent liabilities for borrowing by offshore units, or use funds onshore that have been raised offshore in such structures ...

and more »
Read more...
 

Fitch Affirms HSBC and its UK and HK subsidiaries at 'AA-'; Outlook Stable - Reuters

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Fitch Affirms HSBC and its UK and HK subsidiaries at 'AA-'; Outlook Stable
Reuters
Centrally and locally held liquidity portfolios, most in the form of government bonds, compare well with peers', and the group's limited wholesale funding is well spread. ..... 2 subordinated debt: affirmed at 'A+' Contingent convertible securities ...

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