ICICI to raise $500 mn overseas

ICICI Bank, the country's second largest bank, is raising $500 million of one-year funds through the issue of commercial papers in the US. This is the second time the bank is issuing CPs in the US. It had earlier raised $300 million through this route.

The short-term fund raising follows a $2 billion 5-year borrowing by the bank. The Mumbai-based lender plans to raise another $11 billion overseas in the next one year.

The bank has so far in 2007-08 raised $12.9 billion through debt and equity issuances to fund growth, particularly its overseas business which is growing at over 100 per cent.

The bank through its offshore banking unit in Mumbai, its Hong Kong branch and its Bahrain branch will issue commercial paper notes and use the proceeds for general corporate purposes. Each issuing entity will provide its own series of commercial paper.

Bank of America has issued an irrevocable, direct-pay letter of credit that provides full and timely support for the repayment of each series of ICICI Bank's commercial paper notes on maturity.

Moody's has rated the CPs Prime-1, primarily on the basis of Bank of America's rating. Moody's rating of ICICI Bank is Ba2. The top rating would help the bank price the CPs well and help it to save on the interest cost. Standard & Poor's has also assigned an A-1+ rating to the the bank's CP issue.

The rating on these USCPs will change if Bank of America's short-term counterparty credit rating changes or if there are material changes in the transaction structure.

These USCPs will have a maximum tenor of 360 days and proceeds from this proposed issue are expected to be used for general corporate purposes.

At the end of March 2007, ICICI Bank had total assets of 3,44,700 crore.