Lloyds Banking Group’s plans to raise about £7bn ($7.8bn) worth of so-called contingent capital is expected to provoke further issuance in this type of innovative security, potentially creating a new asset-class in the process, according to bankers and investors.

Contingent capital, which comes in the form of a bond that converts into common equity if certain triggers are breached during a period of financial stress, has rarely been used before and never on the scale some practitioners expect.