ICICI Bank to sell bonds

ICICI Bank, India's biggest lender to consumers, plans to sell dollar-denominated bonds.

The Mumbai-based bank, which raised $1.5 billion in overseas loans this month, hired Goldman Sachs Group Inc, Deutsche Bank AG and Merrill Lynch & Co to arrange the bond sale, according to an e-mail sent to investors. ICICI Bank plans to set terms on the "benchmark'' sized offering during New York trading hours, the e-mail shows.

ICICI is tapping the debt market after the US Federal Reserve cut the benchmark rate for overnight borrowing by half a percentage point to 4.75 per cent on September 18. Investors have so far placed orders for $2 billion of the securities, according to the e-mail.

``I am glad to see the primary market finally reopening,'' said Clifford Lau, a Singapore-based portfolio manager at Pramerica Fixed Income, which manages $7.6 billion in emerging market assets. ``There are a lot of issues waiting to be re- launched.''

ICICI Bank is seeking to price the bonds to yield about 2.375 percentage points more than Treasuries of similar maturity, the e-mail shows.

Investors demand an extra yield, or spread, of 2.24 percentage points to own ICICI's 5.75 per cent bonds maturing in 2012 rather than treasuries, more than double the premium of 1.03 percentage points on June 1, according to HSBC Holdings Plc.

ICICI Bank has been raising funds to meet growing credit demand in the world's fastest-growing major economy after China. India's central bank estimates the $875 billion economy will grow 8.5 per cent in the year to March 31.

ICICI almost tripled its balance sheet to $62 billion in the five years to March 31, according to data compiled by Bloomberg. The bank has said it will increase assets by as much as 30 percent this year.

The bank raised $5 billion in June in the nation's largest share sale and borrowed $1.5 billion, a record loan by an Indian bank, this month.

ICICI Bank has sold $4 billion of bonds since January, the most in a year since Bloomberg started collecting data in 1999. Losses on securities tied to mortgages for people with poor credit histories have increased the cost of borrowing for all but the most creditworthy companies.

Spreads on Asian companies fell to 1.94 percentage points more than treasuries, from 2.08 percentage points on September 17, according to J P Morgan Chase & Co.'s Asian Credit Index. The index remains higher than it was on June 1, when it stood at 1.24 percentage points.