CREDIT Suisse yesterday sold $2bn (£1.24bn) of contingent convertible bonds (cocos) at a public auction that saw strong demand, following its issuance of €6bn’s worth of the convertible bonds to longstanding investors.
They were sold with a coupon rate of 7.88 per cent, lower than expected given that the three-year cocos the bank sold earlier in the week had 9-9.5 per cent rates.
The rate is particularly surprising given that the cocos issued yesterday are longer-dated, being redeemable after five and a half years with a final maturity date of 2041.
The sale shows that Credit Suisse is making an ambitious bid to reach Swiss regulators’ high capital ratio requirements mostly through the use of cocos, which have not previously been a popular asset class.
More financial institutions have been considering their use since a directive clarifying that they can count towards Basel III capital requirements.