Contingent Convertibles (CoCos): Investors and Issuers

Here we discuss how contingent convertibles (CoCos) are priced, and the factors that influence conversion risk. We then consider the potential investors in CoCos, and give examples of some early CoCo issues from issuers such as Rabobank, Lloyds Banking Group, and Credit Suisse. We also give some reasons why CoCos have been rated as highly risky instruments by the major credit ratings agencies.