Subordinated Debt Status For Icici Bonds Mop-Up

Industrial Credit and Investment Corporation of India (ICICI) has decided to treat funds raised through three of its bonds in the retail issue as subordinated debt and qualify it to be treated as tier-II capital of the institution.

The index warrant, deep discount bond and capital gains bond (option II), which form part of the Rs 750-crore retail bond offering slated for the first week of March, will be treated as subordinated debt. The offering carries a green shoe option of another Rs 750 crore. This is the first time that a financial institution in India will be tapping the debt market to raise its tier-II capital. This puts an end to any fresh equity dilution by ICICI in the near future.

 

Besides, ICICI has finalised plans to raise a further $100 million in the overseas market through the subordinated debt programme. For this, it has moved the finance ministry for permission. Sources said that the decision is expected soon. The sources in the FI said that they have not fixed any amount to be raised through the domestic offering for tier-II capital. We are hoping that the response to the index warrant, deep discount bond and capital gains bond (option II) will be very good. But we have not targeted any amount as yet, a source in the FI said. The financial institution is eligible to raise 50 per cent of its tier-I capital through tier-II.