ICICI hits Aussie debt market with $138-million issue

ICICI Bank, India's largest private sector lender, has hit the Australian debt market for the first time with a $138.2-million in five-year money as part of its $5-billion medium-term notes programme.

This is the second bond sale by ICICI Bank after its $750 million bond issue last December and is also the fifth foreign currency offering after the US and Singapore dollars, Swiss francs and Chinese yuan.

"This is our debut offshore Australian dollar issuance which is being placed with investors in Asia and Europe. The expected size is AUD 100-150 million ($138.2 million) for a five-year tenor," an ICICI Bank spokesperson told PTI.

However, he refused to offer the coupon, citing the company policy.

Merchant banking sources said The Baa2/BBB-rated bonds will mature in April, 2019 and were priced over the London overnight rate of 99.665 to yield 6.205 per cent.

The issue carried 'BBB-' rating from Standard & Poor's and 'Baa2' from Moody's.

"The objective of the deal is to diversify our investor and currency base. This also allows us to capitalise on the strong demand for our bonds evidenced in the recent tightening of our secondary spreads," he said.

HSBC and ANZ Bank are the i-bankers to the issue. The money was raised through ICICI's Bahrain branch, according to merchant bankers and the issue got orders were close to AUD 350 million with about 80 accounts participating.

Asia bought 66 per cent of the bonds, Europe bought 29 per cent and Australia bought 5 per cent. Institutional investors were allotted 58 per cent of the issue while the rest was lapped by private banks.

The bonds will have a maturity of five years and will be listed on the Singapore Stock Exchange.

According to merchant bankers, the issue had a spread of 250 basis points over the Mid-swaps--the mid-price arrived between the bid and offer prices.

Last week, Exim Bank had raised $500 million from international debt market in a 5.5-year money that was oversubscribed by over six times and priced at a yield of 3.96 per cent.

Earlier this month, IDBI Bank had raised $300-million under its $5-billion medium term notes issue at 350 basis points over the 5-year US treasury, or an effective yield of 5.061 per cent.

Earlier this month, telecom major Bharti had raised $400 million or 350 million Swiss francs from the Swiss market in a six-year money. This was Bharti's second bond sale this year after it had raised 250 million euros in January in the run-up to spectrum auctions. Last March, the company had raised $1.5 billion in overseas debt sale in two tranches.

The domestic companies overseas bond street journey was opened by Indian Railway Finance Corporation in early January with a $500-million issue, which got subscriptions of $3 billion and was priced at a coupon of 3.917 per cent.

After a massive bond sale last year worth $16 billion, up 60 per cent over 2012, the domestic companies have been going slow to tap international bond market following rising interest rates there.

The overseas fund raising ebbed after the May 24 tapering talk by the Federal Reserve, which spiked interest rates in Western markets. Since then there were only a few issues including HDFC Bank's $500 million in October in December.