Question

Explain about Foreign Currency Convertible Bonds (FCCBs)

Answer 1

Answer:

A foreign currency convertible bond (FCCB) is a type of convertible bond issued in a currency different than the issuer's domestic currency. In other words, the money being raised by the issuing company is in the form of foreign currency. A convertible bond is a mix between a debt and equity instrument

Answer 2

• Foreign Currency Convertible Bonds also known as Foreign Currency Convertible Notes (FCCNs) are quasi-debt instruments issued by Indian companies in foreign currency which may or may not have a coupon and principal payment option or the option of they be converted into shares at a pre-determined rate at the discretion of the investor.

• At present, FEMA allows issuance of FCCBs by Indian companies subject to amount and minimum maturity stipulation under the automatic route. Thus, the Indian private corporate sector can access the international market either as ECBs or ADRs or FCCBs or a combination of all.