ICICI Bank raises $750 million from sale of overseas bonds

The bank said the money was raised yesterday as part of its $5 billion medium term note programme

Private sector lender ICICI Bank said today that its Dubai branch has raised $750 million in a 5.5-year overseas bond sale at a coupon of 4.80%.

 

"Our Dubai branch has raised $750 million in a 5.5 year fixed rate Reg S notes, which carry a coupon of 4.80% and were offered at an issue price of 99.609," ICICI Bank said in a statement.

 

The bank said the money was raised yesterday as part of its $5 billion medium term note (MTN) programme.

 

The issue, which is the first Reg S notes issued from the country after May 24 when the interest rates in the West spiked after the US Fed's tapering talks, attracted 4.5 times the offer or $3.5 billion worth of order, merchant bankers said.

 

Investors would get an yearly yield on 4.882% at year-to-maturity on May 22, 2019. The bonds will be listed on the Singapore Stock Exchange, the statement said.

 

The issue got one of the highest participations from the US and European investors, who together lapped up 66% of the issue, which according to a merchant banker, is a record and highlights the faith of foreign investors in good quality debt from India.

 

Another feature is the pricing of the issue, as ICICI did not pay any premium, as the final pricing is same as secondary bonds of the bank trading on bourses maturing in 2018, a merchant banker said.

 

The lead managers to the issue included Standard Chartered, Bank of America-Merrill Lynch, Citi, Deutsche Bank, and HSBC. None of them wanted to be quoted before completing regulatory filings in all markets where the bonds were sold.

 

The bank also clarified that the current debt is not part of the special swap window that the RBI had opened for banks on September 4.

 

The issue attracted 284 investors, with fund managers constituting 58%, banks 16%, insurance and pension funds 7%, private banks 11%, corporates and others, 8%, a merchant banker said.

 

By geography, non-resident US investors were the largest with 36%, followed by Asians at 34% and Europeans at 30%.

 

This is the second debt-raising by the city-based lender this fiscal after its 1-billion Chinese yuan issue (around $100 million) in June. In January, the bank had raised SGD 225 million (Singapore dollars) in a seven-year bond sale at a coupon rate of 3.65%.

 

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

 

The issue carries a BBB-(BBB-/negative/A-3) rating from Standard & Poor's (S&P). "The rating on the notes reflects the long-term counterparty 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.