CoCo

CoCo Consternation And Systemic Procyclicality

Karen Shaw Petrou's memorandum to Federal Financial Analytics clients on CoCo consternation and systemic procyclicality.

TO: Federal Financial Analytics Clients
FROM: Karen Shaw Petrou
DATE: February 12, 2016

As bank stocks stumble and CDS spreads head into the abyss, the role of contingent convertible (CoCo) debt instruments warrants careful consideration. Their cataclysmic, downward price spiral is a reminder that market discipline is a ruthless task-master, especially when financial problems combine with policy incoherence. Without certainty about who loses what when, CoCos now and perhaps TLAC to come can turn into perfect procyclical storms, as I suggested to Bloomberg . . .

SORRY!

This content is exclusively for paying members. Access all of our content on including years of timeless investment news and in depth analysis for only a few dollars a month by signing up here while also supporting quality content and journalism, or learn more about our premium content here

If you are subscribed and having an account error please clear cache and then cookies if that does not work email support@valuewalk.com or click chat button and we will get back to you as quick as humanly possible


Subscribe to our mailing list

* indicates required

Opt out of occasional 3rd party offers


0