Who or what has been hobbling CoCos: three essentials for making CoCos a success
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.
To our knowledge, this item is not available for
download. To find whether it is available, there are three
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.
Volume (Year): 36 (2013)
Issue (Month): ()
|Contact details of provider:|| Postal: 77 Water Street, 10th Floor, New York NY 10005|
Phone: +1 212 284 8600
Web page: http://www.capco.com/
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: (Prof. Shahin Shojai)
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.