FCCBs stand for Foreign Currency Convertible Bonds. FCCBs are bonds that allow a buyer to convert bonds into equity before maturity at a market-linked pre-determined price. A convertible bond is a mix between a debt and equity instrument. FCCBs act like bonds by making regular coupon and principal payments, but these bonds also give the bondholder the option to convert the bond into stock / equity.

As the name suggests, companies issue FCCBs to raise money in foreign currencies. It is a type of convertible bond with attractive features for both investors and issuer (corporates).

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. 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.

Many Indian companies such as Tata Steel, Sterlite Industries, Reliance Communication, BGR Energy, JSW Steel, Suzlon Energy have issues FCCBs.