ICICI Bank sets initial guidance for first dollar bond in nearly 9 years, bankers say
- The lender is expected to raise at least $500mn through this issue and has provided guidance of a spread of 130 basis points over the corresponding US Treasury yield
MUMBAI: India’s ICICI Bank has provided an initial price guidance for a five-year dollar bond leveraging the central bank’s lower-cost hedging facility, as the private lender returns to the dollar debt market after nearly nine years, two bankers aware of the matter said on Thursday.
The lender is expected to raise at least $500 million through this issue and has provided guidance of a spread of 130 basis points over the corresponding U.S. Treasury yield, the bankers added, requesting anonymity as they are not authorized to speak to the media.
The lender updated its Global Medium Term programme on Wednesday and immediately started the process of raising funds.
ICICI Bank did not immediately respond to a Reuters request for comment.
“The bank should finalise the pricing before the end of Friday, and we are expecting at least 30 bps of a compression from the initial guidance,” one of the bankers said.
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The transaction would mark ICICI Bank’s first dollar bond issuance since December 2017, when it raised $500 million through 10-year bonds at a coupon of 3.80%.
CreditSights has a market perform recommendation on ICICI Bank’s dollar bonds.
The Reserve Bank of India last month introduced a swap facility allowing eligible external commercial borrowings by banks and state-owned companies to be hedged at a fixed rate of 1.5% per annum, compounded semi-annually.
The measure significantly lowers hedging costs, making overseas dollar fundraising more attractive.
The nation’s second-largest private bank will join peers HDFC Bank and Axis Bank, which raised $750 million through five-year bonds and $800 million via a dual-tranche dollar bond issue in June.
The proceeds from the issue would be used for general corporate purposes, the bankers added.
The offering will be rated Baa3 by Moody’s and BBB by S&P Global, in line with the issuer, and would be sold through its GIFT City branch.
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