Going loco for CoCos: Gary Jenkins column
Regulators may view CoCos as vital to new bank capital requirements, but will credit investors be so supportive of a product which contains a risk of forced selling?
Growth and innovation in the bond markets are driven by other factors than the borrowing requirements of companies or sovereigns. It is commonly accepted that the Eurobond market originated from a change in US law, while many recent sophisticated products were developed due to a search for yield.
The next big thing is likely to be a product that, in some shape or form, has been around for a while: CoCos, or contingent convertibles, which are sometimes described as a cross between the saviour of
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