Advanced Search
MyIDEAS: Login

Who or what has been hobbling CoCos: three essentials for making CoCos a success

Contents:

Author Info

Abstract

CoCos are contingently convertible debt securities. They are an infant reform instrument that grew out of the 2007-09 crisis. As hybrid capital, they convert to common equity tier 1 (CET1) outside bankruptcy when a built-in trigger level of the regulatory capital ratio with risk-weighted assets (RWA), CET1/RWA, has been breached. For the going-concern Co-Cos here considered, that trigger level now has to be at least 7%. CoCos offer stabilization benefits from improved crisis management through efficient capital insurance that helps recapitalize a financial firm when needed. Even without regulatory mandates to issue them, they will have a market to the extent they lower the cost of capital to the firm. Despite their promise, there have been few going-concern CoCos issues to date. The outlook will remain bleak as long as complying with the capital requirements proposed by the Basel Committee on Banking Supervision (BCBS) and considered by the European Banking Authority (EBA) in effect relegates CoCos to the category of high-yield (speculative-grade or “junk”) bonds.

Download Info

To our knowledge, this item is not available for download. To find whether it is available, there are three options:
1. Check below under "Related research" whether another version of this item is available online.
2. Check on the provider's web page whether it is in fact available.
3. Perform a search for a similarly titled item that would be available.

Bibliographic Info

Article provided by Capco Institute in its journal Journal of Financial Transformation.

Volume (Year): 36 (2013)
Issue (Month): ()
Pages: 93-104

as in new window
Handle: RePEc:ris:jofitr:1547

Contact details of provider:
Postal: 120 Broadway, 29th Floor New York, NY 10271
Phone: +1 212 284 8600
Email:
Web page: http://www.capco.com/

Related research

Keywords: CoCos; contingently convertible debt securities; crisis management; capital insurance; high-yield bonds;

Find related papers by JEL classification:

References

No references listed on IDEAS
You can help add them by filling out this form.

Citations

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:ris:jofitr:1547. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Peter Springett).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.