A bond is essentially an IOU where an investor loans money to a company or government in exchange for interest payments. Foreign currency convertible bonds (FCCBs) are bonds issued in a foreign currency that can be converted into equity shares of the issuing company. FCCBs allow companies to raise funds at lower costs than regular bonds. The RBI allows Indian companies to issue FCCBs up to $500 million per year without approval. Some companies may buy back FCCBs to reduce debt obligations.

10. IS THIS ENOUGH?

11. FOR R-COM Reliance Communication would most likely be the first company to announce buy back of its Foreign Currency Convertible Bonds (FCCBs) R-Com had issued zero-coupon FCCBs in February 2007, to raise USD 1 billion. The bonds are now trading at a 35% discount to the issue price, meaning, its bonds worth has now come down to US$650 million RCom, as it currently has over Rs.100 billion in cash reserves, which also includes about US$ 600 million worth of investments in mutual funds overseas This move to buy back by Rcom is good, as it would help the company reduce its liability and also bring down its forex exposure.