Foreign Currency Convertible Bonds commonly referred to as FCCB's are a special category of bonds

Bond (finance)

In finance, a bond is a debt security, in which the authorized issuer owes the holders a debt and, depending on the terms of the bond, is obliged to pay interest to use and/or to repay the principal at a later date, termed maturity...

. FCCB's are issued in currencies different from the issuing company's domestic currency. Corporates issue FCCB's to raise money in foreign currencies. These bonds retain all features of a convertible bond

Convertible bond

In finance, a convertible note is a type of bond that the holder can convert into shares of common stock in the issuing company or cash of equal value, at an agreed-upon price. It is a hybrid security with debt- and equity-like features...

 making them very attractive to both the investors and the issuers.

These bonds assume great importance for multi-nationals and in the current business scenario of globalisation where companies are constantly dealing in foreign currencies.

FCCB's are quasi-debt instruments and tradable on the stock exchange

Stock exchange

A stock exchange is an entity that provides services for stock brokers and traders to trade stocks, bonds, and other securities. Stock exchanges also provide facilities for issue and redemption of securities and other financial instruments, and capital events including the payment of income and...

. Investors are hedge

Hedge

Hedge may refer to:* Hedge or hedgerow, line of closely spaced shrubs planted to act as a barrier* Hedge , investment made to limit loss* Hedge , intentionally non-committal or ambiguous sentence fragments-See also:...

-fund arbitrators or foreign nationals.

FCCB's appear on the liabilities side of the issuing company's balance-sheet

Under IFRS provisions, a company must mark-to-market the amount of its outstanding bonds

The relevant provisions for FCCB accounting are International Accounting Standards: IAS 39, IAS 32 and IFRS 7