Foreign Currency Convertible Bond - FCCB

  

Categories: Forex, Bonds, International

Foreign convertibles are pretty sweet: top down in the sun, and up in the rain.

Likewise, some investors are fans of foreign currency convertible bonds, or FCCBs.

Foreign currency convertible bonds are convertible bonds (we’ll go over that in a sec) that are issued in a foreign currency relative to the issuer. So if you’re an American bond issuer, you could issue a foreign currency bond in any currency that’s not USD (otherwise, it’d just be a bond...a U.S. bond).

Convertible bonds, like convertible cars, let investors switch things up depending on the weather. The default for a convertible bond is to act like a regular bond, with things like coupon and principal payments...but it can be converted into stock.

Putting it altogether: a FFCB is a bond (one that can be converted into stock) that’s issued in a different currency than the issuer’s domestic currency. Get some.

Related or Semi-related Video

Finance: What is a Dual Currency Bond?33 Views

00:00

Finance allah shmoop what is a dual currency bond Well

00:07

a currency duel would be way cooler to bonds One

00:12

dusty road in the wild west a saloon a gal

00:15

and a gun plan retired or called are paid whatever

00:21

they call bonds when they're dead Anyway a duel currency

00:24

bond is a bond where the principal and the interest

00:27

payments are made in different currencies like here's a bond

00:30

whose principal is paid off in u s dollars But

00:33

its interest is paid in euros and yeah whatever currency

00:38

being used for interest payments is called the base currency

00:42

Well why would you the investor of want one of

00:44

these things Well dual currency bonds or subject to exchange

00:48

rate risk In other words you're making a gamble not

00:51

just on an investment but on which way the exchange

00:55

rate will bounce That is if you own something it's

00:58

highly exposed two euros while then you're kind of making

01:01

a bet that the relative to the dollar the euro

01:03

zehr gonna appreciate mohr like the government's printing less of

01:07

them You have less inflation whatever because then if that

01:10

repayment currency appreciates well boom you're more in the money

01:14

Than just the interest you collected And if that currency

01:17

doesn't appreciate well there's always bank robbery is a last 00:01:21.189 --> [endTime] resort dual currency dueling currencies No

Up Next

Finance: What is a Yankee Bond?
36 Views

What's a yankee bond, and does it stick a feather in its cap and call it macaroni?

Find other enlightening terms in Shmoop Finance Genius Bar(f)