FCCB - Some Indian Corporates are facing top time

FCCB ( Foreign Currency Convertible Bond ) which was one of the most favorite mode of fund raising route for most of the Indian Corporate few year back is now creating a big problem for all those . As many as 20% of the Companies are likely to default as either they do not have Fund to repay or they are not in a position to do refinancing or the stock price of those Companies are not at all close to the agreed price .Majority of the Companies who had opted for FCCB were either from IT sector or from Pharma sector .About 63% of the Companies are likely to repay the Debt whereas 17% will be able to do refinancing. FCCBs are bonds with a fixed maturity period issued by Indian companies to foreign investors. The bond holders were given the option to convert the bonds into shares of the issuer company at the time of maturity at a pre-decided price. Until they are converted to shares, FCCBs constitute debt of the company. FCCBs caught the fancy of India Inc. as innovative hybrid instruments to access international markets. Following the sustained liberalization programme undertaken by the Indian government, the FCCB market took a quantum leap during the bull run of 2005-2008. According to Prime Data Base, 201 Indian companies raised close to Rs. 72,000 crore through FCCBs during this period. The list of FCCB issuer includes so many renowned names in Indian Corporate. Let see how they all come out of this crisis and what will be the impact due to the default of some Companies