BREAKINGVIEWS-Not only Credit Suisse can do the CoCo

Fri Mar 4, 2011 9:36am GMT

By Neil Unmack

LONDON, March 4 (Reuters Breakingviews) - Bank of Cyprus is planning to sell contingent convertible bonds: a sign the securities aren't just for big, strong banks. But the latest variety comes with a twist: the bonds can be converted into shares in good times as well as bad. They could be a model for other lenders.

Full view will be published shortly.

<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^

Get Breakingviews alerts directly to your inbox three times a day. To sign up click here: here

^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>

CONTEXT NEWS

-- Bank of Cyprus plans to sell 1.34 billion euros of enhanced capital securities, the bank said on Feb. 28.

-- The bonds will convert into shares if the bank's core Tier 1 ratio falls below 5 percent. Bondholders also have the right to convert their holdings into shares at 3.30 euros a share, a 20 percent premium to the current share price, until May 2016.

-- The bonds will be first offered to shareholders, and then to holders of Bank of Cyprus' existing hybrid debt, as well as clients and other external investors.

-- The issue will increase the bank's Tier 1 ratio to 12.7 percent from 11 percent. The euro-denominated bonds yield 6.5 percent, while dollar notes pay 6 percent. Barclays Capital and HSBC structured the deal.

-- Credit Suisse sold $2 billion of contingent capital securities in February. Investors placed $22 billion orders for the bonds, which yield 7.875 percent.

-- Bank of Cyprus statement: here

RELATED COLUMNS

I should CoCo [ID:nLDE71D0NI]

Swiss CoCo shortage [ID:nLDE71H0KS]

-- The author is a Reuters Breakingviews columnist. The opinions -- The author is a Reuters Breakingviews columnist. The opinions expressed are his own --

-- For previous columns by the author, Reuters customers can click on [UNMACK/]

(Editing by Peter Thal Larsen and David Evans)

((neil.unmack@thomsonreuters.com)) Keywords: BREAKINGVIEWS COCO/

(C) Reuters 2011. All rights reserved. Republication or redistribution ofReuters content, including by caching, framing or similar means, is expresslyprohibited without the prior written consent of Reuters. Reuters and the Reuterssphere logo are registered trademarks and trademarks of the Reuters group ofcompanies around the world.

Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.