Template:AI Contingent convertible securities

Contingent convertible securities (“CoCos”) are subordinated debt securities issued by European financial institutions to meet their regulatory capital requirements. They typically have no defined maturity but bondholders can call for repayment normally after around five years. CoCos have a specific strike price that, if breached, convert the bond into common equity or, in certain cases, can results in the Cocos being written down, or off altogether: “taken out to the woodshed”, in the vernacular, meaning the borrower does not have to repay them. This can create a flurry of ambulance-chasing class-action law suits, especially if it happens unexpectedly, and middle-eastern strategic investors still get paid on their equity.