The restructure of Suzlon Energy’s foreign
currency convertible bonds (FCCBs) is the largest in India to
date. It also demonstrates that offshore bondholders and
onshore lenders can reach a solution together.
|The wind turbine
supplier’s deal signalled the
country’s regulatory flexibility
The wind turbine supplier recently substituted its
existing four series of FCCBs with $547 million in new
convertible bonds due 2019.
It’s the latest large Indian corporate
to restructure its FCCBs. The instruments were popular between
2005 and 2008 because of rising equity prices and a favourable
exchange rate. But these became due when these market
conditions had turned, and given many had no currency hedges,
they became problematic.
Suzlon is unusual in that it managed to negotiate
with both offshore bondholders and onshore lenders without
leaving one of those groups behind. But it’s
unclear whether its structure will be replicated.
These restructurings are fairly...