ICICI Bank has successfully raised $1 billion, marking the largest dollar bond sale by an Indian private lender in almost 14 years
ICICI Bank has successfully raised $1 billion through a five-year dollar bond, marking the largest overseas debt issuance by an Indian private lender.
ICICI Bank has successfully raised $1 billion via a five-year dollar bond, marking the largest overseas debt issuance by an Indian private-sector lender in almost 14 years, as reported by bankers familiar with the transaction.
The bank set the bond’s price at a coupon of 100 basis points above US Treasury yields, which is notably tighter than the initial guidance of 130 basis points. The final coupon is set at 5.46%, demonstrating robust investor interest in the offering.
Investor interest surpassed expectations, with the offering drawing approximately $3 billion in orders compared to an initial base size of $500 million, allowing the lender to double the transaction size. The bankers revealed the details under the condition of anonymity, as they were not permitted to speak publicly.
ICICI Bank has yet to provide a response to the request for comment.
The transaction marks the largest dollar bond sale by an Indian private-sector lender in almost 14 years and stands as the second-largest by any Indian bank since State Bank of India’s $1.25 billion five-year issuance in January 2013.
The fundraising follows the introduction of a lower-cost hedging facility by the Reserve Bank of India last month. This facility allows certain banks and state-owned companies to secure their external commercial borrowings at a fixed annual rate of 1.5%, which is calculated twice a year.
The measure has notably decreased hedging costs, enhancing the appeal of overseas dollar fundraising for Indian financial institutions.
Research firm CreditSights projected that the bond would be priced at a spread of between 95 and 100 basis points over US Treasuries, while estimating its fair value at approximately 85 basis points.
Analysts Lim Ze Hao and Pramod Shenoi from CreditSights said that ICICI Bank’s bonds were usually valued in a similar way to HDFC Bank’s current debt and about 10 basis points better than the four-year dollar bonds of State Bank of India, after taking into account the duration premium.
The agreement comes in the wake of comparable international fundraising efforts by other Indian banks. In June, HDFC Bank successfully raised $750 million via a five-year dollar bond, achieving a spread of 92 basis points over US Treasuries. Meanwhile, Axis Bank obtained $800 million through a dual-tranche dollar bond offering in the same month.
ICICI Bank announced that it will allocate the funds raised from the bond sale for general corporate purposes. The bonds are anticipated to obtain investment-grade ratings of Baa3 from Moody’s and BBB from S&P Global, consistent with the bank’s issuer ratings.
The lender last accessed the international debt market in December 2017, raising $500 million through a 10-year bond with a 3.80% coupon.
Following the issuance, CreditSights raised its recommendation on ICICI Bank’s bonds to “outperform” from “market perform,” highlighting attractive valuations and favorable pricing.
