Third $1-billion bond sale by an Indian company this year, others being SBI and RIL.
ICICI Bank, the country’s largest private sector bank, yesterday sold $1 billion of 5.75 per cent, 10-year bonds overseas, taking advantage of lower interest rates in the US compared to the local market, where rates have been rising.
The Mumbai-based bank, which raised the money through its Hong Kong branch, didn’t specify what it planned to do with the funds. The bonds were sold under Rule 144A, which gives them exemption from registration and hence, can be sold only to qualified institutional investors.
This is the third $1-billion bond sale by an Indian company in 2010. State Bank of India (SBI) in July raised $1 billion in five-year overseas bonds and Reliance Industries in October sold $1 billion of 10-year bonds.
Among the bond sales by banks in 2010, the 10-year maturity of ICICI bonds is of the longest tenure. Last month, Axis Bank raised $500 million by selling 5.5-year bonds. Bond sales by IDBI Bank, Union Bank of India, Bank of Baroda and Bank of India were also of same maturity. State Bank of India’s $1-billion bonds in July were of five-year maturity.
With about $7.45 billion raised from bond sales, 2010 overtakes $6.84-billion bond sales in 2007 in dollar terms. In terms of all currencies, the $7.96 billion raised in 2007 is still higher than the $7.45 billion raised so far this year, according to data from Deutsche Bank, one of the arrangers for ICICI Bank’s bonds.
“With an order book of $5 billion, the book was five times covered,’’ said Gunit Chadha, chief executive officer of Deutsche Bank in India. “Of the 325 investors in the book, many were first-time buyers of ICICI Bank.”
About 42 per cent of the bonds were sold in the US, he said. Deutsche Bank said it had been the lead arranger for 11 of the 13 bond sales from India in 2010.