European banks carefully time CoCos revival

London

EUROPEAN banks are playing a nerve-jangling waiting game in an effort to reap maximum rewards from issuing billions of dollars of so-called CoCo bonds in a frenzied market revival that could evaporate in a heartbeat.

The yields that banks need to pay on contingent convertible bonds issued to bolster lenders' capital reserves have been falling steadily as demand has soared, largely from wealthy Asian investors, but this sweet spot of opportunity is looking increasingly fragile.