ICICI Bank raises GBP 350 mn at 6.25%

ICICI Bank has raised (Great Britan Pound) £350 million through a medium term note (MTN)at an interest rate of 83 basis points over the three-year UK government security.

According to officials, even if the interest rate on the UK government paper is floating, the bank has managed to fix the interest rate at the time of the issue which will be valid for three years. In terms of the fixed rate coupon to the investor, it works out to 6.25 per cent for three years. According to market dealers, the bank has managed a fine pricing of the issue by getting a spread of 83 basis points.

The issue comes close on the heels of the banks' proposal of raising equity capital of around Rs 20,000 crore.

As per the press release issued by the bank, this is the first sterling offering from an Indian issuer and also the largest deal in the sterling market from Asia. The funds were raised through the Bahrain branch of the bank.

"The bank has raised funds in sterling to diversify their investor base and source of funding. The capital raised will be largely used for overseas business expansion. There is no major interest rate benefit that the bank is enjoying. It is rather a strategy to diversify investor base,'' said a senior banker.

The bank is planning to use the funds for overseas offices. The offering that bagged £460 million order book with a total of 32 investors, received 95 per cent participation from United Kingdom and balance from rest of the Europe.

In terms of the investors, 80 per cent of the securities were sold to fund managers, 17 per cent to insurance agencies and three per cent to banks and pension funds. The offering was lead managed by BNP Paribas, Citigroup, Deutsche Bank AG and Hongkong andShanghai Banking Corporation.

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 borrower where 26 banks participated, bank officials said. It had raised the loan in three tranches.