ICICI Bank hits overseas bond market again, may raise at least $500 mn

Written by PTI | Mumbai | Updated: Nov 19 2013, 03:35am hrs
ICICIICICI's January issue was oversubscribed by over 13 times, which was lead-arranged by StanChart. Reuters
As part of the its USD 5 billion medium-term note programme, country's largest private sector lender ICICI Bank today hit the overseas bond market with the third such programme this year.

The bank has given a final pricing guidance for the benchmark 5.5-year issue at 360 basis points over the US treasury, according to merchant bankers.

This is the third bond sale by the city-based lender so far this year. It had raised SGD 225 million (Singapore dollars) early January in a seven-year bond sale programme through its Dubai branch at a coupon of 3.65 per cent and a 1-billion Chinese yuan issue (around USD 100 million) in June.

"We have launched a US dollar-denominated Reg S benchmark bond sale programme for ICICI Bank with an initial final price guidance of 360 bps above the US treasury," one of the merchant bankers told PTI.

The merchant bankers include Bank of America-Merrill Lynch, Citi, Deutsche Bank, HSBC and Standard Chartered.

A US dollar-denominated benchmark bond issue can be to the tune of USD 500 million and above, while a Singapore dollar-marked issue could be of SGD 250 million and a Hong Kong sale could be HKD 300 million.

When contacted, ICICI refused to comment saying the issue is yet to be closed.

The current issue, which will be closed tonight, has an S&P rating of BBB- (BBB-/negative/A-3).

"The rating on the notes reflects the long-term counter-party credit rating on the bank. The proposed notes will constitute direct, unconditional, unsecured, and unsubordinated obligations of ICICI Bank. The proposed notes will be listed on the Singapore exchange," S&P said in a statement from Singapore.

ICICI has a mandate to raise USD 5 billion in medium note issue over the next few years. Out of this, the bank had already raised USD 3 billion in the past few years, with USD 1.44 billion last fiscal alone in a mix of US dollars, Swiss francs and Singapore dollars.

The domestic corporates have been raising funds from overseas bond market in an unprecedented manner following high interest rate in the country.

So far this calendar year, corporates like Reliance, Bharti Airtel, ICICI Bank, HDFC Bank, Exim Bank, Tata Comm, Union Bank, among others, had raised over USD 13.5 billion through overseas bond issues between January and mid-May.

However, since late May the appetite for overseas debt had shrunk as cost of funds jumped in overseas markets following the US Fed's indication to wind down its USD 85 billion monthly bond buying programme earlier than expected.

Between June and October, there was just one issue from the country when HDFC Bank raised USD 500 million from overseas bonds on October 24 as part of its USD 2-billion medium-term bonds sale plan. The bank sold the debt at 3 per cent for a three-year unsecured senior bonds (RegS).

Against this, in the entire 2012, domestic companies had raised a little over USD 10 billion.

These new issues indicate revival of corporate interest in raising funds from abroad as they don't see any possibility of domestic interest rates coming down any time soon.

Regulation S bonds or RegS bonds are those offered to non-US residents and qualified institutional buyers (under an exception to US securities laws enacted in 1990) and do not enjoy the same legal protection as other issues enjoy.