Question

Explain coco and nono bond

Distinguish between coco and nono bond

Which bond is better coco or nono

Answer 1

Ans ) Bond : in finance a bond is an instrument of indebtedness of the bond issuer to the holders. There are different types of bond among which coco and nono bond are the one .

Contingent convertible bond ( coco ) ,also known as an enhanced capital notes is a fixed income instruments that is convertible into equity if a pre specified trigger event occurs the concept of coco has been particularly discussed in the context of crisis management in the banking industry. Coco are high yield ,high risk , products popular in European investing .the hybrid debt security carry specialized options that help the issuing financial institutions absorb a capital loss .in the banking industry , their use helps to shore up a bank balance sheet by allowing them to convert their debt to stock if specific Capital condition arise .

Nono bond : nono bond are the are zero cupon bond .coco and nono bond are contingent convertible,putable, callable , subordinate bond . contingent convertible clause is similar to the normal conversion features, expect the contingent features must be met .

difference between the coco and nono bond the major difference between two is that the coco bond have a coupon payment ,and nono bond which are zero cupon bonds.

Coco bond is better than nono bond due to the cuopon payment and high yield .

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