Deutsche Bank CoCo Bonds Have Bumpy Ride as Lender Struggles
- Issue is still-low capital levels, potential losses, fines
- Bonds rise from record lows as bank reassures on coupons
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Investors in Deutsche Bank AG’s riskiest debt are having a bumpy ride as losses push Germany’s biggest lender closer to triggers that would force it to suspend payments on the securities.
Deutsche Bank has the equivalent of about 4.6 billion euros ($5 billion) of contingent convertible bonds, or CoCos, outstanding, according to a presentation for investors. These securities, meant to bolster Tier 1 capital, aren’t dated and coupon payments depend on the lender’s capital level. Deutsche Bank said on Thursday it would be able to pay coupons for 2015, giving the bonds a boost.