Politicians and regulators are counting on contingent convertible bonds, or Cocos as they are affectionately termed, as a way of shoring up the global banking system. The instruments work by converting to equity when a bank is in distress.

The Bank for International Settlements last week confirmed the rules for Cocos it proposed last summer and Standard & Poor's has projected that banks may issue $1 trillion of Coco-style instruments in the next five to 10 years.