A foreign currency exchangeable bond is a type of bond that is issued in one currency but can be exchanged for shares of a foreign company at a predetermined exchange rate. These bonds are issued by companies that want to raise capital in a foreign currency but do not want to issue debt in that currency directly. Instead, they issue bonds in their domestic currency and offer investors the option to exchange the bonds for shares of a foreign company at a later date. This allows investors to diversify their portfolios and gain exposure to foreign markets, while also providing the issuer with an alternative source of funding.

Foreign currency exchangeable bonds are typically issued with a call option, which gives the issuer the right to buy back the bonds at a predetermined price before the maturity date. This allows the issuer to potentially repurchase the bonds at a lower price if the exchange rate for the foreign currency decreases.

These bonds carry some additional risks for investors, including currency exchange rate risk and the risk that the foreign company's stock may not perform well. As a result, it is important for investors to carefully evaluate the risks and potential returns of foreign currency exchangeable bonds before making an investment.

A Foreign Currency Exchangeable Bond (FCEB) is a type of debt instrument issued by a company in a currency different from its domestic currency. These bonds can be converted into shares of another company (usually a subsidiary or an associated firm) at a predetermined exchange rate. FCEBs provide issuers access to foreign capital markets, diversify investor bases, and often offer lower borrowing costs due to favourable exchange rates.

Investors benefit from potential equity upside if the linked company’s stock performs well. However, they face risks like currency fluctuations and equity market volatility. FCEBs are popular among multinational corporations for raising funds while maintaining financial flexibility. Examples include bonds issued in USD or EUR by Asian firms, exchangeable into shares of overseas subsidiaries.