India’s largest private sector lender, ICICI Bank, is planning to raise funds for its overseas branches through five-year dollar-denominated senior unsecured notes issued through its Bahrain branch.

This bond issue, however, is not part of the bank’s $5-billion medium-term note (MTN) programme. According to investment banking sources, the lender has set a price guidance of about 350 basis points over US treasuries for the bonds due to mature in March 2015.

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The notes would be listed on the Singapore exchange.

A spokesperson for ICICI Bank said, “ICICI Bank is raising long-term funds for meeting business requirements of its overseas branches, including for financing of existing loan book and meeting growth opportunities. The end use of the funds would be in the bank’s overseas branches.”

In addition, the lender is supposed to meet investors in the US and the UK to gauge investor appetite for its MTN programme.

As of now, the outstanding amount under the MTN programme is around $1.7 billion.

The bank is currently well-capitalised with a capital adequacy ratio (CAR) of 17.7 per cent. Its Tier-I CAR is 13.3 per cent, the highest among large Indian banks.

Last month, State Bank of India set the ball rolling by raising $750 million through its MTN programme.

Bankers said the SBI bond issue would act as a benchmark for other lenders. The issue was priced at mid-swap plus 90 basis points (bps). Mid-swap is the equivalent of Libor (London Inter-Bank Offered Rate) for longer maturity bonds.

Private sector Axis Bank has also started the process of raising at least $500 million through an MTN programme. Union Bank of India has also announced intention to raise up to $500 million from global markets.

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