Foreign currency convertible bonds (FCCB)

Foreign currency convertible bonds (FCCB)

Foreign currency convertible bond is a special type of bond issued in the currency other than the home currency. In other words, companies issue foreign currency convertible bonds to raise money in foreign currency.

Features of FCCBs

1.        FCCB is issued by an Indian company in foreign currency.

2.        These are listed and traded in foreign stock exchange and similar to the debenture.

3.        It is a convertible debt instrument. It carries interest coupon. It is unsecured.

4.        It gives its holders the right to convert for a fixed numbers of shares at a pre- determined price.

5.        It can be converted into equity or depository receipt after a certain period.

6.        The amount received  from  the  issue  of FCCB should be utilised as per the guidelines of External Commercial Borrowing (ECB).