However, between the time the conversion was triggered and the shares were allotted, shares of Castex plunged to just Later, the RBI further liberalised the scheme and allowed such buybacks under the automatic route. When the bonds mature, if the shares are trading above that price, bondholders can convert their bonds into equity. Register Product search Getting started Search for products Try something new. Go to advanced search.

The 5 Minute Wrapup Profit Hunter. A convertible bond is a mix between a debt and an equity instrument. This stock of FCCBs ran into trouble as share prices fell sharply after the financial crisis of As markets continue to rattle amid earning season, upcoming elections, volatile crude price and US China trade war, it’s a great idea to add some stability to your portfolio by adding dividend stocks. Bond holders could convert the bonds at any time on or after November 24, , but prior to the close of business on September 25,

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case study on fccb

The company had the option to redeem these bonds in whole not in cqse, at any time on or after October 25,but not less than seven business days prior to the maturity date i.

The coupon rates on these bonds are often lower because they offer investors the chance of benefiting from an upside in the equity of a company. INH hereinafter referred as ‘Equitymaster’ is stidy independent equity research Company. Thank you for posting your view on Equitymaster!

Many Indian companies issued FCCBs in which are due to redeem inand this has challenging implications. The stock hit a week high of Rs in Junebut that too is not even half of the conversion price the company had borrowed at. Information herein should be regarded as a resource only and dccb be used at one’s own risk.


Still, those advising companies on fund raising say Indian banks will be wary of lending in such cases, since, as Thunuguntla points out, “Purpose and amount, both are challenging.

As the name suggests, FCCBs are bonds issued in a foreign currency that give investors the option of converting them into equity. While companies cfcb as Uflex are cautiously treading the FCCB redemption path, those like Suzlon are confident of sailing through.

Since the Indian stock fccg is in bad shape, most of the bonds are up for redemption this year And, we will also look at the implications for bondholders.

case study on fccb

Please find below the full details of the product you clicked a link to view. According to a Crisil report, bonds worth Rs 31, crore are coming up for redemption within the next 24 months. This, in turn, meant that these bonds could not be converted into equity and Indian firms were left staring at huge redemptions. By continuing to use our site you consent to the use of cookies as described in our privacy policy unless you have disabled them.

With the maturity date less than a year away, the company has started buying back the bonds.

The advantage it offers relative to other debt instruments like straight bond is that being a foreign currency instrument, it carries lower interest rates. An FCCB is a double-edged sword. Their credit analysis of the company should have also thrown up possible risks.


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The Case Centre is a not-for-profit company limited by guarantee, registered in England No and entered in the Register of Charities No Wait for it… Log in to our website to save your bookmarks. The 5 Minute Wrapup. The thinking was that the since the FCCB crisis was brought on by external factors the global financial crisisregulatory intervention was justified and needed. Leela is not alone.

The market capitalisation of Hotel Leela Venture has nosedived from around Rs 2, crore in to about Rs 1, crore today. As markets continue to rattle amid earning season, upcoming elections, volatile casw price and US China trade war, it’s a great idea to add some stability to your portfolio by adding dividend stocks. On top of that telecom stocks have taken a beating. On Thursday, Castex informed sthdy exchanges that it has allotted shares to bondholders following a mandatory fcb of bonds.

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In the most likely scenario of “mass” redemptions of FCCBs inthese companies caxe choose to exercise one or a mix of the options mentioned below:. During market crashes and bear periods, the conversion price of the FCCBs becomes many times higher than the current share price. Samsung has just launched a new sensor for ultra-high resolution mobile photography How to flash Android Q Beta Indians are searching ‘dating’ more than ‘matrimony’: