I should CoCo - the reg cap market gig to die for
Everyone in the City, it seems, agrees that the demand will be huge - but who will service it? The demand in question is the rapid development of a new generation of securities designed to allow banks to bolster their financial strength under the new Basel III standards. Linklaters last week secured bragging rights after taking a lead role on Credit Suisse's much-touted $8bn (£4.9bn) issue of contingent conversion capital instrument notes (dubbed CoCos) - a new form of convertible bond designed to switch to equity if the issuing bank suffers agreed levels of financial stress. The Credit Suisse deal was structured as a $6bn (£3.7bn) private placement to two large investors and a $2bn (£1.23bn) open auction, which was heavily oversubscribed. Though several banks have used CoCos - notably Lloyds and Rabobank - the Credit Suisse bond is the first time such securities have been fully compliant as core capital under Basel III standards, which start to phase in from 2013.
Who will corner the huge emerging market for Basel III-toughened securities?
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