Contingent Convertibles

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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 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.

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Last Updated on Monday, 09 November 2009 23:56

The CoCo conundrum - Investment Week

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The CoCo conundrum
Investment Week
Contingent convertible bonds (CoCos) have swiftly moved into the mainstream as regulators put more pressure on banks following the financial crisis. However, Dan Daldry, a manager in the fixed income team at Alliance Trust, argues there are many risks ...

and more »

Retail investors allowed into building societies but not cocos - CITY A.M.

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Wall Street Journal

Retail investors allowed into building societies but not cocos
RETAIL investors will be allowed to buy building societies' more complex capital instruments, but not those of banks, the Financial Conduct Authority (FCA) proposed in a consultation yesterday. Banks' contingent convertible bonds, known as cocos, begin ...
FCA looks to permanently restrict Coco sales to retail
FCA consults on CoCos and mutual society shares restrictionsFTSE Global Markets
Funds 'wholly or predominantly' in Cocos could face curbsFT Adviser
Money Marketing -FE Trustnet -Bloomberg
all 19 news articles »

Assets move dismissed - Irish Examiner

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Irish Examiner

Assets move dismissed
Irish Examiner
There has been speculation that the bank would like to hold onto its €400m of contingent convertible bonds rather than convert them into equity. Following the release of the ECB's comprehensive assessment of the banks, the results showed that Permanent ...


CoCos off the menu - Investment Week

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CoCos off the menu
Investment Week
Retail investors will not be buying contingent convertible bonds (CoCos) any time soon, thanks to the Financial Conduct Authority (FCA). right. Tweet. Login Option. To access content on Investment Week you need to have registered… Not registered?

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