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This page is intended for US prospects, clients and investors only and includes information about the capabilities, staffing and history of Robeco Institutional Asset Management US, Inc. (RIAM US) and its participating affiliates, which may include information on strategies not available in the US. US Securities and Exchange Commission (SEC) regulations are applicable only to clients, prospects and investors of RIAM US. Robeco BV, Robeco HK and Robeco SH are considered a “participating affiliate” of RIAM US and some of their employees are “associated persons” of RIAM US as per relevant SEC no-action guidance. Employees identified as access persons or associated persons of RIAM US perform activities directly or indirectly related to the investment advisory services provided by RIAM US. In those situations, these individuals are deemed to be acting on behalf of RIAM, a US SEC registered investment adviser. RIAM US’s SEC registration should not be viewed as an endorsement or approval of RIAM US by the SEC. RIAM US maintains its offices at 230 Park Avenue, New York, NY 10169.
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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.
