Raising Funds from International

Market
 Foreign Currency Convertible Bonds

• 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.
• It acts like a bond by making regular coupon and
principal payments, but these bonds also give the
bondholder the option to convert the bond into stock.
 FCCB
• These kinds of bonds are often listed by large,
multinational companies with offices around the
world, seeking to raise money in foreign currencies.
• For example, an American listed company that issues a
bond in India in rupees has, in effect, issued an FCCB.
• FCCBs are generally issued by companies in the
currency of those countries where interest rates are
usually lower than the home country or foreign
country economy is more stable than the home
country economy.
 FCCB
• An FCCB investor can purchase these bonds at a
stock exchange, and has the option to convert the
bond into equity or a depositary receipt after a
certain period of time.
• Investors can participate in any price appreciation of
the issuer’s stock by converting the bond to equity.
Bondholders take advantage of this appreciation by
means of warrants attached to the bonds, which are
activated when the price of the stock reaches a
certain point.