ICICI is set to enter the debt mart on Friday to raise Rs 800 crore. This is the first public issue of debt by the financial institution after it submitted a blueprint for merging itself with ICICI Bank to the Reserve Bank of India last month.
ICICI needs to raise Rs 18,000 crore by March next year to meet the cash reserve ratio (CRR) and statutory liquidity ratio (SLR) of the merged entity once it becomes a bank on March 31. A banking company is subjected to 5.5 per cent CRR and 25 per cent SLR.
This is ICICI's fifth tranche of unsecured redeemable bonds in the nature of debentures. It plans to mop up Rs 400 crore with a right to retain 100 per cent oversubscription. The yield of five to seven-year instruments like Encash and Regular Income bonds is pegged at between 9 and 10 per cent.
In addition to the five types of regular bonds -- tax saving, Encash, regular income, money multiplier and children growth -- the FI is coming out with a new floating rate bond for the first time. It has also elongated the tenure of the regular bond to seven years as against five years for the earlier issues.
ICICI, which had received the Securities and Exchange Board of India's (SEBI) clearance in May for public issue of unsecured redeemable bonds in the nature of debentures aggregating Rs 5,000 crore with a right to retain oversubscription up to Rs 5,000 crore in one or more tranches, has raised a total of Rs 988.44 crore via four bond issues since the beginning of the financial year.
The institution, in its prospectus to Sebi, has said that consequent to the merger of ICICI with ICICI Bank, full compliance with the prudential norms applicable to the banks is likely to have an adverse impact on the overall profitability of both entities in 2001-02. As on June 30, 2001, it had contingent liabilities of Rs 6,539 crore, outstanding forward contracts of Rs 4,274 crore, estimated amount of contracts remaining to be executed in capital account and not provided for, in respect of lease contracts of Rs 21 crore and other contracts of Rs 18 crore.