Suzlon restructuring sets FCCB precedent

Author: Ashley Lee | Published: 26 Aug 2014
The wind turbine supplier’s deal signalled the country’s regulatory flexibility
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 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...