Unlike an ordinary convertible-bond, conversion is not the holder's choice and is not linked to the share price rising. It is triggered by the issuer's capital deteriorating, which means the instrument converts at the worst possible moment for its holder.
Coupons are typically discretionary and non-cumulative: a bank can stop paying without triggering default, and skipped coupons are never made up. The high yields on these instruments compensate for that combination of risks.
The 2023 resolution of Credit Suisse demonstrated an additional feature many holders had underweighted: the additional tier 1 notes were written down to zero while shareholders retained some value, inverting the usual priority. Read the specific trigger levels, write-down mechanics and regulatory discretion in each instrument's terms.
Related: convertible-bond, issuer-credit-risk, distressed-debt, credit-default-swap, distribution-yield, structured-product