August 2011

Contingent capital: Basle and FSB decisions not death knell for CoCos

Potential market hit hard; Market impetus moves to investor pull


The Basle Committee’s decision in June to disallow the use of contingent convertible (CoCo) bonds to meet capital buffer requirements for systemically important financial institutions (Sifis) came as a nasty surprise to many banks that had invested time and resources in the new instruments.

None had invested more of either than Credit Suisse, which sold its breakthrough $2 billion buffer capital note transaction in February. But the Swiss...


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