Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/172251 
Year of Publication: 
2017
Series/Report no.: 
CFS Working Paper Series No. 586
Publisher: 
Goethe University Frankfurt, Center for Financial Studies (CFS), Frankfurt a. M.
Abstract: 
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.
Subjects: 
CoCos
Contingent Convertible Bonds
Bank Capital Structure
JEL: 
G01
G12
G24
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

Files in This Item:
File
Size
673.62 kB





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.