Reasons for Having Cocos Liabilities on the Balance Sheet

George von Furstenberg

Chapter 9 in Contingent Convertibles [CoCos]:A Potent Instrument for Financial Reform, 2014, pp 92-100 from World Scientific Publishing Co. Pte. Ltd.

Abstract: The question posed for this Part, “Why Cocos?,” demands an immediate summary of the answers. Within a year after cocos first appeared in the market, this short form for contingent convertible debt securities gained currency and attracted a fair amount of derision. As we have seen in the previous chapters of Part II, however, there are in fact several good reasons for the existence of high-trigger cocos. Adding such ‘recovery’ cocos to the financing mix appears superior to staying only with bailinable bonds and relying simply on more equity, or to counting on voluntary restructuring or Chapter 11 (of the US Bankruptcy Code) reorganization as an expeditious and low-cost way out…

Keywords: Contingent Convertibles; CoCos; Financial Reform; Financial Crisis; Risk Management; Bank Capital; Financial Services; Fixed-Income Securities; Basel III (search for similar items in EconPapers)
Date: 2014
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