The fad global and Basel III banking capital requirements are potentially legitimising some securities, that under normal interest rate settings, might not...

The fad global and Basel III banking capital requirements are potentially legitimising some securities, that under normal interest rate settings, might not have seen the light of day. As Basel III is being implemented across the globe, Contingent Convertible bonds aka Coco bonds are gaining greater acceptance among investors who are desperate for yield. (N.B. Read about coco bonds here: (VIEW LINK) Chris Thompson writes; European banks accounted for just over half of last year's record $174bn coco issuance while Asian banks accounted for 39 per cent. To date the market has been dominated by large banks although there are signs that mid-tier financial institutions are also seeking to do deals... Banks have issued $288bn of cocos since the asset class first appeared in 2009, with deal volumes recently bolstered by return-starved investors faced with record low yields on many government and corporate bonds. Last month, the Australia and New Zealand Banking Group (ASX: ANZ) became the first non-Chinese bank to issue a renminbi-denominated Coco. Read the full post from Roger Montgomery here: (VIEW LINK)


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