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December 7, 2009 4:54 pm
Are they bonds? Are they stocks? Or are they actually catastrophe insurance?
Bankers declared the birth of a new asset class - contingent convertible capital notes, nicknamed CoCos - after Lloyds Banking Group announced a successful take-up of a £9bn exchange of CoCos for some of its existing hybrids.
Regulators think these instruments are the answer to banks’ capital prayers because they clear up the uncertainties of existing hybrids by converting into equity at a pre-set trigger and price.
But how do CoCo bonds work? Our interactive feature explains.
Further reading:
Lex: CoCo bonds
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