Tel Aviv Stock Exchange Continues To Improve The Israeli Capital Market - TASE Will Facilitate For The First Time The Issuance Of COCO Bonds By Credit Card Companies

TASE publishes today for public comments a proposal that will enable the credit card companies to issue COCO bonds.

At present, only the banks and insurance companies are able to list COCO bonds.

in light of requests by the credit card companies to enable them to list COCO bonds, TASE has decided to open up new financing channels for the credit card companies and create new investment opportunities for the public.

The Supervisor of Banks, which oversees the activity of the credit card companies, recognizes COCO bonds of a credit card companies as regulatory capital if these meet the conditions prescribed by the Supervisor in the Proper Banking Management Directives.

COCO bonds benefit both the issuer and the investors. They allow the issuer to enhance its regulatory capital and expand its activity without diluting the holdings of the existing shareholders.

The investors gain access to a new investment instrument that incorporates characteristics of both bonds and shares - COCO bonds bear current interest at higher rates than ordinary bonds, however they pose a greater risk due to the loss absorption mechanism that is activated in the event of default by the company.