Sunday, 30 April 2017

Contingent Convertible Bonds ("CoCos")

CoCos are bonds with contingent write-down provisions.

They differ from traditional convertible bonds in two ways:

  • Unlike traditional convertible bonds, which are convertible at the option of the bondholder, CoCos convert automatically upon the occurrence of a pre-specified event.
  • Unlike traditional convertible bonds, in which conversion occurs if the issuer's share price increases (i.e. on the upside), contingent write-down provisions are convertible on the downside.

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