Has the market gone loco for CoCo bonds?

The post-financial crisis regulatory push has fueled a wave of contingent convertible or “CoCo” bond deals, but do either investors or issuers really understand the risks?

This year is already proving a record one for contingent convertible—or "CoCos"—bonds as banks seek to boost their capital buffers, according to data provided for CNBC by financial software company, Dealogic.

So far this year, issuers have launched 102 CoCo bonds—which differ from regular convertible bonds in that they only convert to equity once a specified event has occurred, such as a share price hitting a certain level—up from 68 by the same point in 2014 and only one by the same point in each of 2010 and 2011.

Global contingent capital volumes year-to-date—Dealogic: