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Germany, Article: Contingent Convertible Bonds – a Market with Future
By
Melanie Kiene,
analyst fixed-income-research, Nord/LB Bank,
Hannover, Germany, from Börsen-Zeitung, Frankfurt am Main,
Germany, June 6, 2015
Contingent Convertible Bonds (Coco-Bonds) are enjoying increasing popularity since a few
years. The outstanding volume of Coco-Bond-issues in Europe at the end of May 2015
amounts to roundabout 126 billion Euro. These capital market instruments, issued mostly by
banks, are not new. However, they can be used by credit institutions in order to reinforce their
regulatory equity capital, without having to make an expensive rights issue. The more so, as
the issuance of Coco-Bonds does increase the loss absorption capability, and a bank thereby
becomes more resilient in crises, and this protects the taxpayer from being asked to
eventually bail out such bank.
IAFEI Quarterly | Issue 29 | 35