Mumbai: Private sector lender ICICI Bank said Tuesday that its Dubai branch has raised USD 750 million in a 5.5-year overseas bond sale at a coupon of 4.80 percent.
"Our Dubai branch has raised USD 750 million in a 5.5 year fixed rate Reg S notes, which carry a coupon of 4.80 percent and were offered at an issue price of 99.609," ICICI Bank said in a statement.
The bank said the money was raised yesterday as part of its USD 5 billion medium term note (MTN) programme.
The issue, which is the first Reg S notes issued from the country after May 24 when the interest rates in the West spiked after the US Fed's tapering talks, attracted 4.5 times the offer or USD 3.5 billion worth of order, merchant bankers said.
Investors would get an yearly yield on 4.882 percent at year-to-maturity on May 22, 2019. The bonds will be listed on the Singapore Stock Exchange, the statement said.
The issue got one of the highest participations from the US and European investors, who together lapped up 66 percent of the issue, which according to a merchant banker, is a record and highlights the faith of foreign investors in good quality debt from India.
Another feature is the pricing of the issue, as ICICI did not pay any premium, as the final pricing is same as secondary bonds of the bank trading on bourses maturing in 2018, a merchant banker said.
The lead managers to the issue included Standard Chartered, Bank of America-Merrill Lynch, Citi, Deutsche Bank, and HSBC. None of them wanted to be quoted before completing regulatory filings in all markets where the bonds were sold.
The bank also clarified that the current debt is not part of the special swap window that the RBI had opened for banks on September 4.
The issue attracted 284 investors, with fund managers constituting 58 percent, banks 16 percent, insurance and pension funds 7 percent, private banks 11 percent, corporates and others, 8 percent, a merchant banker said.
By geography, non-resident US investors were the largest with 36 percent, followed by Asians at 34 percent and Europeans at 30 percent.
This is the second debt-raising by the city-based lender this fiscal after its 1-billion Chinese yuan issue (around USD 100 million) in June. In January, the bank had raised SGD 225 million (Singapore dollars) in a seven-year bond sale at a coupon rate of 3.65 percent.
A US dollar-denominated benchmark bond issue can be to the tune of USD 500 million and above, while a Singapore dollar marked issue could be of SGD 250 million and a Hong Kong sale could be HKD (Hong Kong dollar) 300 million.
The issue carries a BBB-(BBB-/negative/A-3) rating from Standard & Poor's (S&P). "The rating on the notes reflects the long-term counterparty credit rating on the bank. The proposed notes will constitute direct, unconditional, unsecured, and unsubordinated obligations of ICICI Bank. The proposed notes will be listed on the Singapore exchange," S&P said in a statement.
ICICI Bank has a mandate to raise USD 5 billion in medium note issue over the next few years. Out of this, the bank has already raised USD 3.75 billion, with USD 1.44 billion last fiscal alone in a mix of US dollars, Swiss francs and Singapore dollars.
Domestic corporates have been raising funds from overseas bond market in an unprecedented manner following high interest rate in the country.
So far this calendar year, firms like Reliance, Bharti Airtel, ICICI Bank, HDFC Bank, Exim Bank, Tata Communications, Union Bank, among others, had lapped up over USD 13.5 billion through overseas bond issues between January and mid-May.
With the latest ICICI issue, the total debt raised by domestic companies this year touched USD 14.25 billion. Against this, in the entire 2012, domestic companies had raised a little over USD 10 billion.
However, since late May, the appetite for overseas debt had almost evaporated, as cost of funds jumped in overseas markets after the US Fed's indication in late May to wind down its USD 85 billion monthly bond buying programme earlier than expected.
Between June and October, there was just one issue from the country, when HDFC Bank raised USD 500 million from overseas bonds on October 24, as part of its USD 2 billion medium-term bonds sale plan. The bank sold the debt at 3 percent for a three-year unsecured senior bonds (Reg S).
Regulation S bonds or Reg S bonds are those offered to non-US residents and qualified institutional buyers (under an exception to US securities laws enacted in 1990) and do not enjoy the same legal protection as other issues enjoy.