Ø In the month of Dec i had mentioned companies will face redemption pressure in early 2012.With India's economic growth buckling and the rupee sliding, many companies, are expected to struggle to meet debt obligations in the coming months
Ø Investors will try their best to recover their money. So can the companies refinance? or will they extend the repayment date? Or lastly take a shave or haircut and reach a settlement, Holders will always want to take whatever money is possible and get out. If the companies chose to refinance redemption, then profits would take a hit
Ø "FCCB" a type of convertible bond issued in a currency different than the issuer's domestic currency. In other words, the money being raised by the issuing company is in the form of a foreign currency. A convertible bond is a mix between a debt and equity instrument. It acts like a bond by making regular coupon and principal payments, but these bonds also give the bondholder the option to convert the bond into stock.
Ø With India's economic growth buckling and the rupee at an all-time low, many companies are expected to struggle to meet debt obligations in the coming months. Seeking to finance acquisitions and their aggressive expansion, Indian companies raised funds through foreign currency convertible bonds (FCCBs) and bank loans before the financial crisis struck in 2008.
Ø Many of those debts need to be repaid next year, and the timing could hardly look any worse. The rupee has nosedived and is Asia's worst performing currency this year. It's a very tricky situation for Indian companies. More than two dozen companies on the Indian benchmarks face FCCB redemption worth 330 billion rupees by the end of the next fiscal year in March 2013.
Ø The convertible bonds are too expensive at current levels to be converted into stocks, and the weaker rupee, which slumped to an all-time low of 54.30 to the U.S. dollar ,will leave issuers with a heavy redemption burden.
Ø The rupee has lost close to a fifth of its value since July, and is adding to a growing sense of economic crisis in India. Given the current state of markets, FCCB conversion into equity shares won't happen, and even refinancing would be difficult. And If any default it will have an horrendous domino effect in the country.
Ø Companies who issued FCCB and Maturing Next Year Are As follows:-
| FCCBs | |||||
| Issuer | Redemption Month | Year of issue | Conversion price (Rs/share) | Current stock price Rs/share | FCCB size (US$mn) |
| Ruchi Infrastructure Ltd | Feb-12 | 2007 | 39.2 | 18.0 | 40.0 |
| Murli Industries Ltd | Feb-12 | 2007 | 379.0 | 17.1 | 23.0 |
| Rajesh Exports Ltd | Feb-12 | 2007 | 67.1 | 139.0 | 150.0 |
| Orchid Chemicals & Pharma ltd | Feb-12 | 2007 | 348.3 | 149.9 | 175.0 |
| Reliance Communication LTd | Mar-12 | 2007 | 661.2 | 82.8 | 1,000.0 |
| Subex Ltd | Mar-12 | 2007 | 656.2 | 33.0 | 180.0 |
| Subex Ltd | Mar-12 | 2009 | 80.3 | 33.0 | 98.7 |
| Uflex Ltd | Mar-12 | 2007 | 144.7 | 135.4 | 85.0 |
| Icsa India Ltd | Mar-12 | 2007 | 189.7 | 31.3 | 22.0 |
| Kamat Hotels India | Mar-12 | 2007 | 225.0 | 126.4 | 18.0 |
| Klg Systel Limited | Mar-12 | 2007 | 350.0 | 27.1 | 22.0 |
| 3I Infotech Ltd | Apr-12 | 2007 | 154.3 | 16.0 | 39.8 |
| Grabal Alok Impex Ltd | Apr-12 | 2007 | 51.0 | 18.0 | 20.0 |
| Hotel Leela Venture Ltd | Apr-12 | 2007 | 72.0 | 33.3 | 100.0 |
| Bharat Forge Limited | Apr-12 | 2006 | 604.0 | 277.6 | 40.0 |
| Icsa India Ltd | Apr-12 | 2007 | 226.8 | 31.3 | 24.0 |
| Sterling Biotech Ltd | May-12 | 2007 | 163.1 | 13.0 | 250.0 |
| Man Industries India Ltd | May-12 | 2007 | 115.0 | 106.5 | 50.0 |
| Suzlon Energy Ltd | Jun-12 | 2007 | 97.3 | 20.7 | 300.0 |
| Suzlon Energy Ltd | Jun-12 | 2009 | 76.7 | 20.7 | 35.6 |
| Moser Baer India Ltd | Jun-12 | 2007 | 364.0 | 17.8 | 75.0 |
| Strides Arcolab Ltd | Jun-12 | 2007 | 461.6 | 378.3 | 100.0 |
| Jsw Steel Ltd | Jun-12 | 2007 | 953.4 | 631.6 | 325.0 |
| Rolta India Ltd | Jun-12 | 2007 | 368.7 | 68.7 | 150.0 |
| Tata Motors Ltd | Jul-12 | 2007 | 181.4 | 206.2 | 490.0 |
| Gemini Communications Lt | Jul-12 | 2007 | 41.7 | 20.0 | 20.7 |
| Micro Technologies India | Jul-12 | 2007 | 250.4 | 172.4 | 20.0 |
| Educomp Solutions Ltd | Jul-12 | 2007 | 590.0 | 211.6 | 80.0 |
| 3I Infotech Ltd | Jul-12 | 2007 | 165.9 | 16.0 | 100.0 |
| Gayatri Projects Ltd | Aug-12 | 2007 | 288.0 | 117.8 | 25.0 |
| Zenith Infotech Ltd | Aug-12 | 2007 | 521.6 | 43.9 | 45.0 |
| Tulip Telecom Ltd | Aug-12 | 2007 | 227.4 | 116.8 | 150.0 |
| Tata Steel Ltd | Sep-12 | 2007 | 730.5 | 388.9 | 875.0 |
| Jaiprakash Associates | Sep-12 | 2007 | 165.2 | 58.8 | 400.0 |
| Everest Kanto Cylinder L | Oct-12 | 2007 | 271.3 | 31.7 | 35.0 |
| Suzlon Energy Ltd | Oct-12 | 2007 | 97.3 | 20.7 | 200.0 |
| Suzlon Energy Ltd | Oct-12 | 2009 | 76.7 | 20.7 | 20.8 |
| Great Offshore Limited | Oct-12 | 2007 | 565.0 | 87.3 | 42.0 |
| Karuturi Global Ltd | Oct-12 | 2007 | 19.0 | 4.9 | 50.0 |
| Plethico Pharmaceuticals | Oct-12 | 2007 | 483.8 | 365.4 | 75.0 |
| Gtl Infrastructure Ltd | Nov-12 | 2007 | 53.0 | 10.4 | 300.0 |
| Firstsource Solutions Ltd | Dec-12 | 2007 | 92.3 | 8.1 | 275.0 |
| Easun Reyrolle Ltd | Dec-12 | 2007 | 315.0 | 57.0 | 35.0 |
| Pidilite Industries | Dec-12 | 2007 | 102.4 | 145.8 | 40.0 |
| Prime Focus Ltd | Dec-12 | 2007 | 110.9 | 54.4 | 55.0 |
| Shree Asht Cine Vision | Dec-12 | 2007 | 44.0 | 4.2 | 33.0 |
| Indowind Energy Ltd | Dec-12 | 2007 | 167.1 | 6.3 | 30.0 |
| Aksh Optifibre Ltd | Jan-13 | 2008 | 59.8 | 7.1 | 20.0 |
| Geodesic Ltd | Jan-13 | 2008 | 302.3 | 45.1 | 125.0 |
| Bartronics India Ltd | Feb-13 | 2007 | 191.3 | 32.1 | 50.0 |
| Jaiprakash Associates | Mar-13 | 2006 | 74.5 | 58.8 | 199.1 |
| Sintex Industries Ltd | Mar-13 | 2008 | 246.5 | 72.2 | 225.0 |
| Bharat Forge Limited | Apr-13 | 2006 | 690.3 | 277.6 | 40.0 |
No comments:
Post a Comment