ICICI Bank raises $1 billion overseas

The country's second-largest and largest private sector bank ICICI Bank today borrowed $1 billion from overseas markets to fund credit growth. The yen-denominated syndicated loan is the largest by an Indian bank.

The loan is split into three tranches of $350 million for 364 days, $450 million for two years and $200 million for three years.

ICICI Bank's loans grew 47 per cent to Rs 1,63,785 crore at the end of September 2006 from a year earlier, while the industry growth is over 30 per cent.

The bank's loan assets overseas (including foreign currency finance to domestic companies) rose 56.25 per cent to about Rs 15,000 crore as on September 30, 2006 from a year ago. The bank operates in 14 countries through branches, representative offices and wholly-owned subsidiaries.

Chanda Kochhar, deputy managing director, ICICI Bank, said, "The $1 billion syndication is a benchmark deal as this facility marks the largest syndicated loan for an Indian bank borrower."

The loan is being raised in yen as the withholding tax burden will be lower because of lower interest rates in Japan. The six-month yen Libor (London interbank offered rate) is 0.60 per cent against the comparable dollar Libor of 5.37 per cent.

A total of 26 banks participated in the syndication facility "� the widest participation for any Indian Bank syndication in the international markets, ICICI Bank said. The transaction was concluded in just one month from the date the mandate was awarded, it said.

This is the fourth time ICICI Bank has tapped the global debt market in 2006. In October, it raised $400 million through five-year bonds, priced at 120.6 basis points (one basis point is one hundredth of one per cent) over comparable US government security.

In August, the bank garnered $340 million through perpetual, hybrid tier-I securities at a coupon of 7.25 per cent. The pricing was at a spread of 194 bps over Libor, translating into a spread of 247 bps over 10-year US treasury bond.

Earlier in the year, ICICI Bank had raised $300 million through a commercial paper programme in the US to support the bank's growing international operations. It has also raised Rs 2,700 crore from the domestic market through the issue of tier-I and tier-II bonds since January this year.

The bank's CAR (capital adequacy ratio) was 14.34 per cent at the end of September 2006, up from 11.52 per cent a year earlier.