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CoCo market lacks buoyancy

Contingent capital was expected to explode into a $100 billion-a-year market. But the bumper issuance has failed to materialise

In the heady days before bank capital regulations under Basel III were finalised, market participants were confidently predicting that contingent capital issuance, which became shortened to CoCos, could top $1 trillion within a decade.

That represents a run rate of $100 billion a year, but issuance since then has failed to live up to expectations, even though investors have responded well to deals when they have appeared.

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