It stands for contingent convertible trigger, a trigger in a contingent convertible (CoCo) the breach of which forces a CoCo to be converted into equity or written down. Logically, a high trigger can help avoid the so-called “debt-induced collapse,”where the cost of debt service on CoCos raises the default limit above the conversion level.

A high trigger, if market-induced, can ensure a correlation between a trigger based on an issuing bank’s stock price and the impact of CoCo conversion on its stock price.

A CoCo usually has a mechanical conversion at a CET1 trigger and discretionary conversion (supervisory conversion) at non-viability.