ECNs stands for Enhanced Capital Notes. They are, somewhat confusingly also referred to as CoCos or Contingent Convertibles. ECNs are a new form of fixed income security which have arisen out of the need for banks to increase their capital ratios as a result of the banking crisis. The first UK issuer of ECN’s has been Lloyds Banking Group plc. This was under an Exchange Offer announced on 3 November to exchange its existing Tier 1 and Upper Tier 2 securities into new ECN’s

The key feature of the Lloyds ECN’s is that while they carry mandatory coupon rights they may also be mandatorily converted into ordinary shares if the Core Tier 1 capital ratio of the bank falls below the 5% level (known as the trigger).