This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Swiss Sweeten Bank 'Coco' Bond Market

Stocks in this article: CS LYG

NEW YORK ( TheStreet) -- Credit Suisse (CS) announced Monday that it issued $6.17 billion (CHF 6 billion) in contingent capital, or "coco" bonds, to bolster the bank's balance sheet and satisfy regulators' capital requirements.

Credit Suisse said that it sold $3.5 billion and CHF 2.5 billion in "Tier 1 buffer capital notes" to Qatar Holding and The Olayan Group, a Saudi investment vehicle. The notes have a coupon of USD 9.5% and CHF 9% each, a bank statement said, and are in exchange for $3.5 billion of and CHF 2.5 billion of Tier 1 capital notes issued in 2008.

"The completion of a transaction of this size supports our conviction that contingent capital can be a material source of capital for the banking industry and, in addition, that this will be an attractive instrument for the large group of current investors who hold existing hybrid capital instruments," said Credit Suisse CEO Brady W. Dougan in a statement.

Coco bonds are hybrid securities that convert into equity when, and if, a bank hits trouble and requires a capital boost. They have been pushed by international regulators as a way for banks to increase their capital requirements under Basel III without raising expensive equity.

Thus far coco bonds have had limited success in the banking industry, with Lloyd's Banking Group (LYG) issuing $14 billion in the U.K., and Netherlands-based Rabobank issuing over $2 billion the securities last year.

However, the coco bond market is expected to increase this year as banks attempt to raise new capital. In December, Standard & Poor's reported that at least $1 trillion in coco bonds could be issued over the next five to 10 years.

"Investors in the new generation of bank hybrids will have a much higher risk/return profile than investors expected for 'legacy' hybrids," the S&P report said.

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 17,804.80 +26.65 0.15%
S&P 500 2,070.65 +9.42 0.46%
NASDAQ 4,765.38 +16.9840 0.36%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs