Foreign Currency Convertible Bond - FCCB


DEFINITION of 'Foreign Currency Convertible Bond - FCCB'

A type of convertible bond issued in a currency different than the issuer's domestic currency. In other words, the money being raised by the issuing company is in the form of a foreign currency. A convertible bond is a mix between a debt and equity instrument. It acts like a bond by making regular coupon and principal payments, but these bonds also give the bondholder the option to convert the bond into stock.

BREAKING DOWN 'Foreign Currency Convertible Bond - FCCB'

These types of bonds are attractive to both investors and issuers. The investors receive the safety of guaranteed payments on the bond and are also able to take advantage of any large price appreciation in the company's stock. (Bondholders take advantage of this appreciation by means warrants attached to the bonds, which are activated when the price of the stock reaches a certain point.) Due to the equity side of the bond, which adds value, the coupon payments on the bond are lower for the company, thereby reducing its debt-financing costs.

  1. Coupon

    The annual interest rate paid on a bond, expressed as a percentage ...
  2. Bond

    A debt investment in which an investor loans money to an entity ...
  3. Convertible Preferred Stock

    Preferred stock that includes an option for the holder to convert ...
  4. Convertible Bond

    A bond that can be converted into a predetermined amount of the ...
  5. Eurobond

    A bond issued in a currency other than the currency of the country ...
  6. Warrant

    A derivative security that gives the holder the right to purchase ...
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