ICICI Bank raises $1.5bn yen-loans

ICICI Bank, the largest private sector bank in India, has raised yen-denominated loans equivalent to $1.5 billion from 10 foreign banks.

The syndicated loan was raised in three tranches of $500 million each with tenures ranging from one to three years. The one-year loan was raised at 27 basis points over the London interbank offer rate (Libor) for yen, two-year loan at 44 basis points over Libor and three-year loan at 65 basis points over Libor.

"This is a syndicated loan where 10 banks participated. In the current market condition, this was the finest pricing we could get. The overall volatility in overseas market on account of the subprime problem had no bearing on our fund raising. Moreover, the credit quality of the bank is very strong,'' said Vishakha Mulye, group chief financial officer at ICICI Bank.

Bayern LB, BNP Paribas, Calyon, Commerzbank, Goldman Sachs, HSBC, Intesa Sanpaolo, Natixis, Standard Chartered Bank and Sumitomo Mitsui Banking Corp are the lead manager to the issue. ICICI bank plans to complete the loan syndication by the first week of September.

ICICI's offshore senior debt is rated BBB-minus by Standard & Poor's Ratings Services.

The bank has opted for yen borrowing to save on withholding tax on interest payments because Japan has the lowest interest rate among major economies.

The three-month yen London interbank offered rate, a benchmark for corporate borrowing, is at 0.8 per cent. The comparable dollar rate was fixed at 5.36 per cent on August 3.

The loan programme comes close on the heels of ICICI Bank raising around Rs 20,000 crore through a follow-on public issue and from overseas market through issuance of American depository receipts.

The bank had raised euro 500 million in March 2007 and a yen-denominated loan of $1 billion in December 2006 to meet its lending requirements.

This was the largest syndicated loan for an Indian bank where 26 banks participated, bank officials said. It had raised the loan in three tranches. In May, the bank had raised another £350 million through a medium term notes (MTN) issue.