Skip to main content

Clifford Chance

Clifford Chance

Briefings

Issuance of hybrid debt instruments and so-called contingent convertible bonds (CoCo)

17 August 2016

Apart from the issuance of securities treated purely as debt instruments (e.g. bonds) or equity instruments (e.g. shares), it is also possible to issue so-called "hybrid instruments". They are securities that make it possible to combine the benefits of debt and equity. CoCo (Contingent Convertibles), i.e. bonds subject to automatic conversion into equity, are a special type of such instrument. The issuance of hybrid instruments offers numerous benefits to issuers which are not provided by standard debt/equity instruments. At the same time, provided they fulfil the relevant criteria, hybrid instruments may be considered equity instruments for accounting purposes. Because of this they increase the equity ratio of their issuer without affecting the level of the issuer's debt.

Download PDF