Barclays CoCo Essay Example | Topics and Well Written Essays - 750 words

Barclays CoCo - Essay Example instrument, debt is reduced, and it qualifies as a Tier 1 capital increasing the book value of the bank’s equity capital before the occurrence of the trigger event. When a CoCo triggers, there are two things involved; the losses involved are absorbed by the CoCo either by suffering a principal write-down or by transforming into common equity. In the case of principal write-down, the bonds are written down to equity that matches the extent of liabilities released thus generating exceptional gains that are allocated to the bank’s retained earnings (Stefan, Anastasia & Bilyana, 2013). In cases where the CoCo is convertible, when a trigger is met, the bond automatically converts to common stock as a prearranged percentage. As the CoCo bond market unceasingly grows, investors are exposed to various risks and rewards. One of the appalling risks faced by investors in CoCos is the systematic risk. The CoCos market is vulnerable. A conversion or coupon deferral may soon occur causing a fall in price upto 9% and a significant drop in conversion circa -15%. This could put CoCo holders in a worst/unfortunate position than shareholders (Stefan, Anastasia & Bilyana, 2013). Moreover, there exists information asymmetry in the CoCos market where investors have little knowledge regarding the operation of the CoCos while the issuers are fully aware of their credit fundamentals. For instance, the PONV (point of non-viability) as a language has been hard for many investors to comprehend thus upsurging the risks of them losing their cash by investing in unfeasible CoCos. According to Stefan, Anastasia and Bilyana (2013), this coupled with the complexity of CoCos, and the flawed CoCo rating methodologies presents a majo r risk to investors and might lead to unfathomable losses. Nevertheless, CoCos are rewarding as they provide a high yield of 4.5%-10% that is better than the average yield of circa 4.2% for high yield sectors in the U.K (Chorafas,  2015). These high returns continue

Supply chain Case Study Example | Topics and Well Written Essays - 500 words

Supply chain - Case Study Example He realized that both manufacturers and retailers were dealing with thinner margins due to market conditions. He wanted to cut costs out of the distribution channel without compromising service. The new approach towards logistics that Brando envisioned involved rather than sending products to the distributors according to their internal planning process, the company would analyze the distributor’s shipment data and send only what is needed at the stores. The solution proposed that the company take full control of its supply chain by becoming responsible for determining the quantities and delivery schedules. Brando believed that this new system would help everyone reduce inventory levels. â€Å"Each day each distributor would provide us data on what Barilla product it had shipped out of its warehouse to retailers during the previous day, as well as the current stock level for each Barilla SKU† (Hammond). Replenishing orders would be made by the company based on that data . The new proposed system was called just-in-time-distribution (JITD). The new JITD system met with resistance to change from the employees of the company. The sales and marketing department felt that the system would interfere with their job duties. Their responsibilities would be diminished if the new program was put into action. A conflict that the JITD imposed was that it would flatten the sales of the company. The company would not be able to adjust their shipments to changes in selling patterns or increased promotions. Implementation of the JITD system imposed the creation of a sophisticated relationship with suppliers that the company might not be ready to handle. The company would run the risk of giving up shelf space to the competition. The new system was susceptible to stockouts. The firm would not be able to run promotions that give incentives to the customers to purchase more. The new JITD system might be visualized by the distributors as a hassle due to the fact that the system