India amends foreign currency convertible bond rules
NEW DELHI, Feb 15 (Reuters) – India on Monday amended rules for foreign currency convertible bonds (FCCB) to allow issuers to revise their conversion price, a move aimed at reducing price uncertainty in a volatile equity market.
The change will give issuers a window of 6 months to adjust the conversion price of their bonds to the higher of either the two weeks average or the six months average of the issuing company’s stock.
The decision unveiled by the finance ministry applies to companies that issued FCCBs before Nov. 27, 2008.
In November 2008, the government had changed the FCCB pricing rules bringing the issue price of the securities offered closer to their market price. That move had benefited only those companies, which issued FCCBs after Nov. 27, 2008, placing firms having issuances before that date at a disadvantage.
The new changes will come into effect immediately, but the price revision would require the Reserve Bank of India’s approval. (Reporting by Rajesh Kumar Singh; Editing by Ranjit Gangadharan)
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