What exactly is Foreign Currency Indexation?
A currency can be indexed but so can a bond. An indexed bond is one where the coupons and principal are indexed to another currency (the U.S dollar in the case of Tesobonos) at the spot rate in effect at the time of issuance. So you actually pay in the local currency but how much you pay depends on the prevailing exchange rates when payment is due. 

A bond can be indexed without a currency being indexed. It is typically a way, much like a foreign currency denominated debt issuance, to remove local inflation and exchange risk from debt issuance.