Icici Refinances $50m Scici Loan

ICICI has refinanced a $50 million syndicated loan taken by SCICI last year at almost half the earlier price.

The financial institution (FI) has reduced its interest cost on the 7-year loan by almost 55 basis points (bp). It has done so by contracting a six-year $50 million loan at an all-in cost of 65 bp over the London Inter-Bank Offered Rate (Libor).

This is one of the first tangible benefits of the merger of ICICI and SCICI earlier this year, said bankers. By virtue of its bigger balance sheet and greater name recognition among investors, the former has been able to refinance the earlier loan taken by SCICI at a much lower cost, they added.

There is a good difference between SCICI and the merged entity, ICICI, in terms of quality of borrower, a senior treasury official at ICICI told Business Standard. ICICI officials said saving for the FI in terms of interest cost will mount to $250,000 dollars a year. Over a six-year period this represents a saving of $1.5 million.

The earlier seven-year loan taken by SCICI Ltd in 1996 was priced at a coupon of 110 bp over Libor with an all-in cost of 120 bp over Libor. ICICI officials also said if the opportunity arose, other SCICI loans may also be refinanced, but no firm decision had been taken.

In 1997, SCICI had borrowed $250 million through external commercial borrowings (ECBs). The lead arranger for the six-year loan was ANZ Grindlays Investment Bank. Grindlays officials said 10 banks from eight countries formed the syndicate including BNL Bank, Banque Paribas and Arab Banking Corporation.

The large number of banks in the syndicate shows the demand of paper from players like ICICI is very strong in the international loans market, said a Grindlays official. The merger of the two FIs was announced last December. The Bombay High Court formally approved it on April 3 1997.

Apart from ICICI, other FIs have also raised money at attractive rates. IDBI and Exim Bank have recently raised $100 million each at all-in cost of 62 and 60 bp over Libor respectively.

However, apart from refinancing the SCICI loan, ICICI has not gone in for any fresh dollar borrowing yet in 1998.