ICICI Bank Raises $750 Million Through Dollar Bonds

Research Analyst: UJVIN NEVATIA (PROPRIETOR: NEVAT INVESTMENTS) | SEBI Registration No.: INH100009628 ICICI Bank (

) has raised $750 million through a five-year dollar bond, priced at a spread of 105 basis points over the five-year U.S. Treasury yield. The issue carried a coupon of 5.417% and was priced tighter than the initial guidance of 130 basis points. This was the bank's third dollar fundraising transaction within a month. Earlier, ICICI Bank raised $1 billion through a five-year dollar bond in July and another $300 million in August, taking its recent dollar debt fundraising to $2.05 billion, according to banker reports. What Does the Bond Spread Mean? The spread represents the additional yield investors demand over a comparable U.S. Treasury security. In this case, investors were offered a yield 105 basis points above the five-year U.S. Treasury yield. Bond pricing can reflect factors such as the issuer's credit profile, investor demand and prevailing global interest-rate conditions. Why Are Indian Banks Raising Dollar Debt? Indian banks have increasingly tapped overseas markets after the RBI introduced a foreign-exchange swap facility that reduced hedging costs for eligible foreign-currency fundraising. However, the RBI has since advanced the closure of this facility to August 31, which has contributed to banks accelerating their overseas fundraising plans. For ICICI Bank, overseas borrowing adds another source of funding. The overall financial impact will depend on the cost of funds, hedging costs, deployment of proceeds and future funding requirements. Source: The Economic Times No Recommendations