Cityville Moneymarket Financial Terms 101,What is are Convertible Contingency financing,CoCo Bonds

Contingent convertible bonds (CoCo bonds) are convertibles that convert, or become convertible, is a specified event occurs, rather than being simply convertible at the option of the bond holder.

A typical CoCo bond is a bond that is automatically converted to equity if the issuer needs money: for example if the issuer is a bank the condition may be that it will convert to equity if the issuer’s tier one capital falls below a limit. The automatic conversion will then re-capitalise the bank.

Aka. Convertible capital – hybrid debt instruments known as CoCos – as hybrid Tier 1 capital as part of a package to recapitalise banks.