Wednesday, 5 March 2014

Fred's Blog: The craziest bond investment?

This post from Fred Wollard's Blog, who I am supposing someone with knowledge of the matters he writes about (it seems so) about a kind of Investement that is being relatively talked about in the Institutional space for the last couple of years or so: CoCo Bonds or Contingent Convertible Bonds.

The assessement is crystal clear: the risks are great. And the shareholder position in the issuer Bank: the best possible! Given the low, in terms of value/net asset position of the shareholders and stakeholders of many Financial Institutions, including Insurance companies or Pension Funds, it isn't a surprise to see the issuing institution (mainly commercial Banks) shareholders' value being maximised.The sell-side of the trade is the one with the greatest incentive to the CoCo play.

Fred's Blog: The craziest bond investment?: Anyone who has ever borrowed money has worried about what would happen if something bad happened to them, and they had trouble r...