ICICI $ bonds rise as investors return

ICICI Bank, India's biggest lender to consumers, had its bonds rise after a debt sale yesterday boosted funding by $2 billion, indicating that investor risk appetite may have returned to Asian credit markets.

The yield on the bank's 6.625 per cent bonds due October 2012 fell by 16.15 basis points to 6.4835 per cent at 10:00 a.m. in Singapore, according to Merrill Lynch & Co. The price increased by 0.622 cents to 100.598 today, Merrill Lynch said.

UPBEAT AGAIN

ICICI Bank's bonds rise after a debt sale yesterday boosted funding by $2 billion

The yield on the bank's 6.625 per cent bonds due October 2012 fell by 16.15 basis points to 6.4835 per cent

The recent Fed rate cut has bolstered investor confidence among investors, boosting equity and bond markets

ICICI joined other investment-grade and high-yield borrowers in selling dollar-denominated bonds 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.

The rate reduction bolstered investor confidence that stability might return to credit markets roiled by losses in securities linked to US subprime mortgage loans.

The 6.625 per cent of five-year notes were issued at a discount of 99.916 cents on the dollar to yield 237.5 basis points more than US Treasuries of similar maturity, according to data compiled by Bloomberg. A basis point is 0.01 percentage point.

The Mumbai-based 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 raised $5 billion in June in India's biggest share sale and got a $1.5 billion loan, a record by an Indian bank, this month.

It has sold $4 billion of bonds since January, the most in a year since Bloomberg started collecting data in 1999.

The Mumbai-based lender is rated BBB-, the lowest investment grade, by Standard & Poor's and one level higher at Baa2 by Moody's Investors Service. Goldman Sachs Group Inc., Deutsche Bank AG and Merrill Lynch & Co arranged today's debt sale.