CASE STUDY ON FCCB

The debt-to-equity ratio will get more stretched. Click here to Enlarge. 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. According to a Crisil report, bonds worth Rs 31, crore are coming up for redemption within the next 24 months. The advantage it offers relative to other debt instruments like straight bond is that being a foreign currency instrument, it carries lower interest rates. Now play the battle royale game wearing Baahubali outfit More.

Register Product search Getting started Search for products Try something new. This stock of FCCBs ran into trouble as share prices fell sharply after the financial crisis of Later, the RBI further liberalised the scheme and allowed such buybacks under the automatic route. In addition, the domestic bond markets are also showing early signs of deepening. And, we will also look at the implications for bondholders.

Each bond would be converted into However, it should serve as a reminder that ccase products come with complex risks. Also, there is no systemic risk here. In some cases, winding-up petitions have been filed.

case study on fccb

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. The bonds are set to mature in June and October While the Leela Group’s newest property has been especially designed to attract a foreign clientele, its Chief Financial Officer is busy staving off foreign investors.

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The company reported an 86 per cent drop in its profits for the January-March quarter on the back of lower customer billings. But as the maturity date nears, many companies have either already begun negotiations – usually asking for more oh – or started the buyback process. They are also assured return in form of fixed coupon rate payments.

An FCCB is a double-edged sword. Sales on the other hand came in at Rs 3 bn up Product details Share this page: Nair, the founder of Leela, hold Google OnePlus 7 Pro price and specifications leaked: Investors will want redemption. It has the features of a bond, with regular interest payments to be made, and at maturity, the principal to be repaid.

case study on fccb

FCCBs have been in the limelight in India for some time now as an option for raising capital for meeting capital expenditure requirements. Pay through PayPal Amount to be paid: It could justifiably be argued that the bondholders did not do adequate homework before investing. ECBs might give companies some breathing room for now, but these borrowings could come at an interest rate of one to five per cent over the London Interbank Offered Rate – the world’s most widely used benchmark for shortterm interest rates.

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Their credit analysis of the company should have also thrown up possible risks. Many Indian companies issued FCCBs in which are due to redeem inand this has challenging implications. Sales on the other hand came in at Rs m up Companies prefer issuing FCCBs as the interest rate on them is much lower than that on a regular “domestic” bond. Trouble at Wockhardt Limited.

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The Murphy’s law of foreign currency convertible bonds

In the meantime, you may want to share this article with your friends! Since the Indian stock market is in bad shape, most of the bonds are up for redemption this year But Thunuguntla, who has been tracking the company, says: According to a Crisil report, bonds worth Rs 31, crore are coming up for redemption within the next 24 months. More Views on News. 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.

Restless at redemption

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case study on fccb

By continuing to use our site you consent to the use of cookies as described in our privacy policy unless you have disabled them. But the fact of the matter is that FCCBs are niche products which have had a troublesome past.