Contingent Convertibles (CoCos) are debt instruments primarily issued by European financial institutions. Contingent convertibles work in a fashion similar to traditional convertible bonds. They have a specific strike price that, once breached, can convert the bond into equity or stock. The primary investors for CoCos are individual investors in Europe and Asia and private banks.The popularity of CoCos is due to their relatively high yields and the fact that they offer protection against losses in the event of a company's default. For example, if Company A defaults on its debt obligations, the holders of its CoCos will be repaid before any other creditors. This makes them an attractive investment for risk-averse individuals and private banks who want to protect their capital in case of a company failure without sacrificing too much return on investment (ROI).Despite their benefits, there are some risks associated with investing in contingent convertibles. One such risk is issuer concentration; if too many companies default on their debt obligations at once, it could cause widespread panic among CoCo investors and lead to significant losses across the market as a whole. Additionally, there is always some chance that the conversion trigger will not be activated even if the company experiences difficulties – meaning investors could lose out on potential profits if things go south.