ICICI Bank raises ₹1,000 cr via Tier-II bonds at 7.45% amid demand

The lender's first Tier-II bond issue in FY26 drew strong investor interest, allowing tight pricing despite rate volatility; bonds have 15-year maturity with 10-year call

ICICI Bank, India’s second-largest private sector lender, on Thursday tapped the domestic debt capital market to raise ₹1,000 crore through Tier-II bonds at a coupon of 7.45 per cent, said sources aware of the development.

 

The base issue was ₹500 crore and had a green shoe option of ₹500 crore. The Tier-II bonds have a maturity of 15 years, with a call option available after 10 years, sources said.

 

Market participants noted that the issue was tightly priced, given the current environment where long-term yields on AAA-rated PSU bonds have crossed 7 per cent. 

 

 

“Amidst a volatile and uncertain rate environment, initial market indications were in the range of 7.50 per cent. However, strong investor interest—driven by the fact that this is ICICI Bank’s first Tier-II issuance of the fiscal year (FY26) and the relatively moderate issue size—enabled the bank to achieve tighter pricing. For a long-dated Tier-II instrument with a 10-year call, the cut-off yield of 7.45 per cent is considered competitive and reflects robust investor appetite despite prevailing rate uncertainty,” said a market participant.

 

Tier-II bonds are subordinated debt instruments issued by banks to strengthen their Tier-II capital—a key component of regulatory capital under Basel III norms. These bonds carry higher risk than senior debt but rank above equity in the capital structure.

 

As of March 2025, ICICI Bank’s capital adequacy ratio stood at 16.55 per cent, with CET-I ratio at 15.94 per cent and Tier-II at 0.61 per cent.

 

The private sector lender is tapping the market after a long gap. Last year, it raised ₹3,000 crore through 10-year infrastructure bonds at 7.53 per cent.