The agency of CoCo: Why do banks issue contingent convertible bonds?

Arbeitspapier

Why do banks issue contingent convertible debt? To answer this question we study comprehensive data covering all issues by publicly traded banks in Europe of contingent convertible bonds (CoCos) that count as additional tier 1 capital (AT1). We find that banks with lower asset volatility are more likely to issue AT1 CoCos than their riskier counterparts, but that CDS spreads do not react following issue announcements. Our estimates therefore suggest that agency costs play a crucial role in banks' ability to successfully issue CoCos. The agency costs may be higher for CoCos than for equity explaining why we observe riskier or lowly capitalized banks to issue equity rather than CoCos.

Angaben zum Objekt

• Sprache: Englisch

Verweise und Beziehungen

• Erschienen in: Series: CFS Working Paper Series ; No. 586

Klassifikation und Themen

• Klassifikation: Wirtschaft ; Financial Crises ; Asset Pricing; Trading Volume; Bond Interest Rates ; Investment Banking; Venture Capital; Brokerage; Ratings and Ratings Agencies
• Thema: CoCos ; Contingent Convertible Bonds ; Bank Capital Structure

Beteiligte, Orts- und Zeitangaben

• Ereignis: Geistige Schöpfung
• (wer): Goncharenko, Roman ; Ongena, Steven ; Rauf, Asad
• Ereignis: Veröffentlichung
• (wer): Goethe University Frankfurt, Center for Financial Studies (CFS)
• (wo): Frankfurt a. M.
• (wann): 2017

Weitere Informationen

• Handle: http://hdl.handle.net/10419/172251
• URN: urn:nbn:de:hebis:30:3-437353
• Letzte Aktualisierung: 10.03.2025, 11:42 MEZ