When a bank’s capital falls below a pre-specified limit, its cocos automatically convert from debt to equity at a fraction of their previous price.

Sovereign cocos would assuage the fear of creating an AIG-like event, in which a too-big-to-fail underwriter is over-exposed.

In fact, the success of banks in issuing cocos suggests that investors do have the appetite for them.

There would be worries that adding cocos to sovereign bonds might raise governments’ borrowing costs.

Adding cocos to government bonds will require solving a host of technical problems.

Cocos in sentence