Contingent Convertibles (CoCos)
A security similar to a traditional convertible bond in that there is a strike price (the cost of the stock when the bond converts into stock). What differs is that there is another price, even higher than the strike price, which the company's stock price must reach before an investor has the right to make that conversion (known as the "upside contingency"). Investopedia Says:
Issuing contingent bonds is more advantageous to companies than issuing regular convertibles. Until an investor exercises the option, the company does not need to count shares in its calculation of diluted earnings. (Note: as of July 2004, the FASB's Emerging Issues Task Force proposed an accounting change that, if passed, would eliminate the accounting advantage of CoCos.) Related Terms:
Busted Convertible Bond
Common Stock
Conversion Price
Convertible Bond
Convertible Preferred Stock
Convertibles
Diluted Earnings Per Share
Irredeemable Convertible Unsecured Loan Stock - ICULS
Mandatory Convertible
Structured Yield Product Exchangeable For Stock - STRYPES |