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Rupee's free-fall hits companies with outstanding FCCBs

By Religare

The rupee's decline is likely to hit the promoters of the companies who raised money through Foreign Currency Convertible Bonds (FCCBs) as their liability increases many-fold with every drop in rupee's value.

As per a data, as many as 47 companies carry outstanding FCCBs worth USD 4.7 billion and some of them are set to mature in couple of months while around a dozen will come for settlement next year.


The largest FCCB dues are of Tata Steel at USD 546.94 million due for maturity in November 2014, followed by Sterlite Industries with USD 500-million FCCBs due in October 2014 and Sesa Goa with USD 216.8-million FCCBs, also due in October.

Rupee has plunged over 8 per cent since the month of May and also touched its fresh record low of 58 against US dollar on Monday. Experts said that borrowers who had hedged their positions are less likely to be impacted than those with no hedge.

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