UNHEDGED FCCBS : HEDGING MUST

The Reserve Bank of India has raised concerns over companies keeping un hedged their foreign currency exposures accrued from the issue of Foreign Currency Convertible Bonds (FCCBs). The central bank's worries are rooted in the fact that share prices of most of the companies, which issued FCCBs, fell sharply from their - May month rate, and, as a result, the funds raised are expected to remain as debt in records and may not be converted into an equity. Statistics showed that Indian companies raised over $9 billion through FCCB issues since January 2004 and over $7 billion since January 2005.