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Contingent Convertible
(redirected from CoCo Bonds)

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Contingent Convertible
A convertible bond in which the price of the underlying stock must reach a certain level before conversion is allowed. All convertible bonds have a conversion price, that is, the price one pays in order to exchange the bonds for stocks. Contingent convertible bonds, however, have a second, higher price that the underlying stock must meet before a bondholder is allowed to convert. For example, the conversion price for a convertible bond may be $10 per share, but if the stock price is below $20 per share, the investor may not convert the bond.


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Here the CoCo bonds would turn to equity if the capital ratios of the banks fall below a pre-determined trigger level.
 
 
 
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