CoCos Pop with Opportunity – Meeting the Quest for Yield

As investors continue to search for yield, CoCos, short for contingent convertible bonds, may offer investors exactly that. Created in the aftermath of the financial crisis, CoCos have quickly become a popular choice among investors. But what exactly are they, why are investors drawn to them, and what do investors need to know when investing?

Earlier this week I released a paper entitled, CoCos pop with opportunity…in the hands of a research-rich investor. In the piece, I give a brief background on the creation and appetite for CoCo bonds with the majority of the paper focused on the key attributes to consider when analyzing CoCos. I end by explaining the value they add to any portfolio and how to implement them correctly.

As a teaser, and to add some real color to the value they can add…

In today’s market, the yield to maturity of newly issued CoCos is on average 2.0% higher than that of other subordinated debt and 3.3% higher than that of senior unsecured debt of the same issuer. – sourced from Barclays indices.

Check out the full piece here.


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