The Basel II framework could require financial institutions to beef up their capital ratios, a change that has increased the appeal of contingent-capital bonds. Bankers, regulators and other industry insiders are struggling to come up with a definition of the trigger for when the debt converts to equity. "The trigger is a challenging aspect of this product, particularly from a regulatory perspective," said Peter Jurdjevic, head of the capital-products team at Barclays Capital. "It might be this is not an instrument that lends itself to one universal trigger that is suitable for all institutions."

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