Key terms emerge on Greek banks’ CoCo bonds

3 November 2015
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The key terms and conditions of Greek banks’ CoCos have started to emerge, according to a source familiar with the situation.

On Sunday, the country’s government said that Greece’s bank bailout fund HFSF would provide state aid to recapitalise the country’s main banks by buying a mix of contingent convertible bonds (CoCos) and new shares the lenders will issue .

According to the source, the bonds will be perpetual and carry an 8 percent annual coupon. They will be fully discretionary and paid in cash or shares. The CoCos will rank pari passu with common shares.

If two coupons are missed or the bank’s CET1 ratio falls below 7 percent, the principal will be automatically converted at the share price set at the 2015 capital increase.

There is also an optional conversion feature at HFSF’s discretion in year seven.

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