ICICI Bank doubles overseas borrowing limit to $5  billion

The country’s second-largest private lender had previously set its borrowing limit at $2.5 billion. “The money will be raised through issuances of bonds, notes and offshore certificates of deposits in overseas markets for a revised limit of up to $5 billion,” the bank said in a stock exchange filing.

The amount of $5 billion is an enabling provision that will help the bank raise money at various tranches, maturities and interest rates based on the appetite from fixed income investors and also the pricing.

ICICI Bank has a medium-term note (MTN) programme of $7.5 billion. MTN is a pre-approved fund-raising limit or a flexible debt issuance framework that allows banks or institutions to raise overseas funds without any legal and regulatory clearances each time a bond is issued.

ICICI Bank raised $750 million earlier this week through a five-year US dollar bond at a tight spread of 105 basis points over five-year US Treasuries, bringing its total dollar debt fundraising to $2.05 billion. Earlier the bank had raised $1 billion in a single-tranche bond in July, the largest single issuance by an Indian lender. Though the bank had guided for a price of 130 basis points over the five-year US Treasury yield, it was able to tighten the pricing to 100 basis points.

The bond had a coupon rate of 5.46%. The strong fundamentals of the bank helped the bond getting oversubscribed by 2.3 times from a wide base of fixed income investors.

Banks have been dashing to the international markets to raise money after the RBI advanced the deadline for the closure of its special concessional window on FCNR(B) deposits to August 31 as against an earlier deadline of September 30.

For external commercial borrowings (ECBs) and overseas foreign currency borrowings (OFCBs), the RBI continues to offer its swap facility until December 31.

Meanwhile, HDFC Bank raised $1.75 billion in senior unsecured bonds, its biggest overseas fundraise since 2008 on Thursday. The bank said that the dual issuance was through its Gift city Branch in Gujarat. The first tranche is $500 million of three-year bonds maturing on August 26, 2029, and the second tranche was $1.25 billion of five-year bonds with maturity on August 26, 2031.

The three-year notes carry a coupon of 5.159%, while the five-year notes offer 5.401%, with interest payable semi-annually. The tranches will be settled on August 26, 2029 and Augst 26, 2031, respectively.

Both private and public sector lenders are busy tapping the overseas debt market. IDFC raised $600 million through overseas bonds, while Kotak Mahindra Bank raised $650 million in its debut issuance of five-year bonds.

The deluge of bond issuances was begun by HDFC Bank, when in June, it became the first lender the first to tap the overseas bond market with an issuance of $750 million using RBI’s 1.5% fixed-rate swap facility for ECBs. The bank raised the bond at a tight pricing of 90 basis points over the 5-year US Treasuries.

Following the successful fund raise by HDFC Bank, Axis followed, raising $500 million through an Additional Tier 1 (AT1) perpetual issue and another $300 million through a senior five-year bond in transaction.

Most recently State Bank of India (SBI) raised Regulation S bonds of $500 million benchmarked against the 5-year US Treasuries and priced it at a spread of 88 basis points over the benchmark.

Bank of Baroda was the other big issuer among Indian banks that raised $700 million through a twin issuance. The bank raised $400 million for a 3- year bond issuance at 90 basis points over the US Treasuries and another tranche of $300 million for a 5 -year bond issuance priced at 100 basis points over the US Treasuries.