CoCo the clown
Share
I hate clowns. The way they look, the connotations with Stephen King’s IT and the fact I simply find them unfunny all key reasons behind this intense dislike. But this dislike is not to be confused with irrational fear, a phobia which is called Coulrophobia.
The reason for this little clown related chat is to do with CoCos. Yes CoCos. Or to give them their unabbreviated name, contingent convertible bonds.
In an investment note on his Old Mutual Corporate Bond fund, Stephen Snowden looks at CoCos, which simply put are convertible bonds in reverse (covert bonds to equity when the share price is weak) since their launch as part of the Lloyds rights issue in November. (article continues below)
However, rather than being scared of CoCos, Snowden bought into the concept and exchanged his existing Lloyds holdings into them. Two months into trading and Snowden says the early signs for CoCos are promising, with the yield falling from more than 11% to 9% now.
No doubt if this success continues we can expect more clown-related puns as the retail fund industry gets another nice piece of jargon to play with. But the kudos goes to Snowden for getting in there first.
