FASB closes contingent convertible tax loophole

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A new ruling by the Financial Accounting Standards Board (FASB) will alter the way in which companies account for their contingent convertible securities, also known as CoCos. This decision could force nearly 400 companies to adjust their earnings per share (EPS), while depressing the new issuance market for convertibles.

Like all convertible bonds, CoCos can be exchanged for stock if the share price reaches a certain level. But the price at which a CoCo converts is usually 20–30% higher tha

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