Disclaimer
BY CLICKING ON “I AGREE”, I DECLARE I AM A WHOLESALE CLIENT AS DEFINED IN THE CORPORATIONS ACT 2001.
What is a Wholesale Client?
A person or entity is a “wholesale client” if they satisfy the requirements of section 761G of the Corporations Act.
This commonly includes a person or entity:
who holds an Australian Financial Services License
who has or controls at least $10 million (and may include funds held by an associate or under a trust that the person manages)
that is a body regulated by APRA other than a trustee of:
(i) a superannuation fund;
(ii) an approved deposit fund;
(iii) a pooled superannuation trust; or
(iv) a public sector superannuation scheme.
within the meaning of the Superannuation Industry (Supervision) Act 1993that is a body registered under the Financial Corporations Act 1974.
that is a trustee of:
(i) a superannuation fund; or
(ii) an approved deposit fund; or
(iii) a pooled superannuation trust; or
(iv) a public sector superannuation scheme
within the meaning of the Superannuation Industry (Supervision) Act 1993 and the fund, trust or scheme has net assets of at least $10 million.that is a listed entity or a related body corporate of a listed entity
that is an exempt public authority
that is a body corporate, or an unincorporated body, that:
(i) carries on a business of investment in financial products, interests in land or other investments; and
(ii) for those purposes, invests funds received (directly or indirectly) following an offer or invitation to the public, within the meaning of section 82 of the Corporations Act 2001, the terms of which provided for the funds subscribed to be invested for those purposes.that is a foreign entity which, if established or incorporated in Australia, would be covered by one of the preceding paragraphs.
Fixed income
CoCo bonds
CoCo bonds, or contingent convertible bonds, are a type of hybrid debt instrument primarily issued by financial institutions. They combine features of both debt and equity and are designed to enhance a bank's capital structure while protecting it against financial distress. These bonds are part of the regulatory framework introduced after the global financial crisis to improve banks' resilience during economic downturns.
How CoCo bonds work
CoCo bonds include a built-in trigger mechanism that activates under certain, pre agreed conditions. If a bank’s capital ratio falls below a specified threshold, the bonds automatically convert into equity or suffer a write-down of their principal value. This conversion mechanism helps banks absorb losses and boost their capital base without requiring external bailouts.
Investor appeal and risks
CoCo bonds offer higher yields compared to traditional bonds, compensating investors for their elevated risk. However, they with the higher yield comes greater risk, including regulatory uncertainty, market volatility, and the potential for loss during financial stress.
A long history of innovation
Role in financial stability
CoCo bonds play a critical role in strengthening financial stability by ensuring that private investors bear part of the losses during a crisis instead of taxpayers. They also provide banks with a flexible capital-raising tool that aligns with regulatory requirements, making them an important component of the modern financial system.
