CoCo
Business & Finance abbreviation · Bond & Fixed-Income
| Stands for | Contingent convertible bond |
|---|---|
| Categories | Business & Finance |
CoCo stands for Contingent convertible bond, a bond & Fixed-Income abbreviation.
Bank bond that automatically converts into equity or is written down if the bank's capital falls below a preset trigger or regulators declare it non-viable, absorbing losses before taxpayers do. CoCos pay high coupons to compensate for this risk.
Example: Investors in Credit Suisse's CoCos were wiped out when the bank was rescued in March 2023.
Usage notes
Most European CoCos qualify as Additional Tier 1 (AT1) capital. The write-down of about 16 billion Swiss francs of Credit Suisse AT1 bonds, while shareholders still received some value, shocked investors and led EU and UK regulators to stress that equity absorbs losses first in their jurisdictions. Pronounced "coco."
Related abbreviations
More bond & Fixed-Income abbreviations
- CDO – Collateralized debt obligation
- CDS – Credit default swap
- CDX – Credit default swap index
- CLO – Collateralized loan obligation
- CMBS – Commercial mortgage-backed security
- CMO – Collateralized mortgage obligation
- CP – Commercial paper
- DV01 – Dollar value of a basis point
- ESTR – Euro short-term rate (€STR)
- EURIBOR – Euro Interbank Offered Rate
- FRA – Forward rate agreement
- FRN – Floating-rate note