Explain coco and nono bond Distinguish between coco and nono bond Which bond is better coco...

Explain coco and nono bond

Distinguish between coco and nono bond

Which bond is better coco or nono

Expert Solution

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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