The Daily Telegraph - Saturday - Money
IN FOCUS TWENTYFOUR DYNAMIC BOND
Contingent convertibles, or Cocos, are issued by banks and serve as emergency reserves if they get into trouble. They are high-risk, high-yield bonds and investors receive interest only if the bank stays strong. If it suffers large losses from bad loans and its capital buffer shrinks below a set level, the bonds convert into shares and the bank wipes the debt from its balance sheet.