ICICI to float $300 mn in US via CP issue

ICICI Bank is planning to raise $300 million through a commercial paper programme in the United States.

ICICI Bank will be the first Indian entity to tap the US commercial paper (CP) market. It will also be the biggest short-term overseas borrowing programme.

"The short-term instruments will be issued for various maturities, ranging from 30-90 days and 180-364 days, depending upon the liquidity requirements and the movements in the market.The funds raised will be used to support the bank's international operations and would be in infused into branches which are witnessing a rise in overall assets," ICICI Bank sources said.

This CP programme is backed by a $300 million direct-pay letter of credit issued by Fortis Bank NV/SA and global rating agency Standard & Poor's has assigned a A-1+ issue rating to this programme.

The CPs would be issued through ICICI Bank's branches in Singapore and Hong Kong and its offshore banking unit in Mumbai.

The CP holders will be repaid by Fortis Bank through its Connecticut branch and hence the investors bear the credit risk of Fortis Bank. The A-1+ rating on CP issue is equal to the short-term rating on Fortis Bank, said a release issued by S&P.

The CPs constitute direct, unconditional, unsubordinated and unsecured obligations of the bank and will rank pari passu with all of the bank's unsecured and unsubordinated obligations.

They include its existing $500 million senior unsecured bond due 2010, $150 million senior unsecured bond due 2007, $300 million senior unsecured bond due 2008 and $300 million senior unsecured bond due 2009.

In addition to the CP issue in the US, ICICI Bank is also raising upto $300 million through a yen-denominated 1-year loan.

The basic issue is for $250 million and it will have a greenshoe option of $50 million. This loan will be used to fund the bank's domestic operations.