Practical Law UK Glossary 2-500-8660 (Approx. 3 pages)
Glossary
Contingent convertible bond (CoCo)
Also known as an enhanced or mandatory capital note. A form of hybrid security that converts from being a bond (typically subordinated) into an equity security in the issuer upon the happening of a defined regulatory trigger point, for example, a fall in the issuer’s Tier 1 capital. Because of these characteristics, such instruments may also be described as contingent capital instruments. Before conversion, investors receive a coupon payment. Following conversion, the instrument pays dividends.