Based on the investment and financing theory under uncertainty (real options) ，this paper aims to examine the interaction between investment size，investment timing and capital structure for a financially constrained firm issuing contingent convertible debt (CoCos) . Then a new rationale for the use of CoCos is provided from the perspective of mitigating the firm’s financing frictions and pressure. The following results are derived. First，the optimal investment size is independent of conversion ratio. Second，compared with the straight debt case，CoCos can decrease the severity of financing constraints and the loss of firm value arising from inefficient investment and financing decisions. Finally，financially constrained firms with low growth rate， conversion ratio，conversion leverage and high corporate tax rate are more likely to benefit from issuing CoCos.