Global issuance of contingent convertible bonds, or CoCos, in 2017 will be similar to last year (about $75 billion in 2017 vs. $78 billion in 2016) as banks have to a large extent already satisfied their capital needs, says Moody's in a report published today.

Moody's report, entitled "Banks -- Global Moody's CoCo Monitor: Q1 2017 Off to Steady Start" is available on www.moodys.com.

"Global CoCo volumes in 2017 will likely be along the same lines as last year because, with capital requirements sufficiently fulfilled, banks have less need to load up on capital and have reduced the heavy issuance we saw in 2014 and 2015. These lower capital needs, as well as a recently introduced "junior senior" debt class that gives investors an alternative to CoCos, will keep issuance steady," says Simon Ainsworth, senior vice president at Moody's.

In Q1 2017, global issuance of CoCos was up slightly versus a year ago. Issuance totaled $16 billion as of Q1 2017, up 5 per cent from $15.2 billion in Q1 2016, following a 44 per cent drop in Q1 2016 issuance from $26.9 billion in the year-earlier quarter.

Europe and Asia Pacific continued to drive issuance in Q1 2017, with European issuance totaling $8.5 billion, 53 per cent of global issuance, while issuance in Asia Pacific totaled $6.8 billion, 42 per cent of global issuance.

Notably, Chinese banks have returned to the market following a six-month hiatus, although the country's four largest banks still have not issued.

Banks in Australia, China, Switzerland and the UK, the top four countries by volume of issuance, all issued more than $1.5 billion each, and comprised approximately 58 per cent of total Q1 issuance with a combined $9.3 billion. Australian banks led issuance with $2.9 billion, 18 per cent of Q1 issuance, while the UK banks issued $2.6 billion, 16 per cent of the quarter's issuance, with large issuances by Barclay's and Standard Chartered.

Issuers in Switzerland and China accounted for 11 per cent and 14 per cent of global CoCo issuance, respectively, in Q1. Additionally, Turkey was more prominent in Q1 2017: with three Turkish banks entering the market, two for the first time, issuing a combined $1 billion of Tier 2 securities during the quarter. - TradeArabia News Service