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ICICI Bank, the nation's second biggest lender, will join the State Bank of India and Indian Overseas Bank in raising funds from overseas bond sale in the next few weeks with a billion dollar issue as credit markets ease after the European Central Bank pledge to save the Euro.
The bank is negotiating with a few global investment banks on the interest rate range that it could pay on those bonds, two people familiar with the matter said. If the bank manages good rates it may raise the size of offering, they said. This would be the first bond issue by ICICI since May 2011, when it raised $ 1 billion in a 5.5 year fixed rate notes with a coupon of 4.75%.
""We continuously keep exploring various avenues of fund raising in form of public bond issuances and private placements under the Global Medium Term Notes based on market conditions and pricing,"" said an ICICI spokesman through an e-mail.
After a 5-month gap, the State Bank of India kicked off overseas fund raising by Indian entities with a $1.25 billion issue last month. It was soon followed by the Exim Bank with a $500 million sale. Indian Overseas Bank, Syndicate Bank also plan to raise funds through such bonds to mainly fund Indian companies that seek overseas loans. The revival in issuances from Indian companies is after such sale fell to the equivalent of $140 million last quarter, the lowest since 2009, Bloomberg data shows.
Indeed, the rates are getting better by the day with Exim Bank, with a sovereign backing, managing to better State Bank. While SBI sold its 4.125% five year notes at 375 basis points above similar maturity US Treasuries, Exim managed to sell its 4% similar maturity notes at just about 325 basis points over the Treasuries. Lesser the spread between the yields of the seller's bonds and US Treasuries, the cheaper it is for borrowers.
Borrowers may rush in the next few weeks to take advantage of better state of the European markets before India's potential rating downgrade pushes up the cost of borrowing higher again.
Standard & Poor's, a rating company, lowered India's credit outlook to negative from stable citing slowdown in investment and economic growth, and widening of the current-account deficit which hit a record 4.5% of the gross domestic product for the March quarter. S&P rates India's sovereign long-term debt at BBB-, just a notch above junk.
Source: EconomicTimes
The bank is negotiating with a few global investment banks on the interest rate range that it could pay on those bonds, two people familiar with the matter said. If the bank manages good rates it may raise the size of offering, they said. This would be the first bond issue by ICICI since May 2011, when it raised $ 1 billion in a 5.5 year fixed rate notes with a coupon of 4.75%.
""We continuously keep exploring various avenues of fund raising in form of public bond issuances and private placements under the Global Medium Term Notes based on market conditions and pricing,"" said an ICICI spokesman through an e-mail.
After a 5-month gap, the State Bank of India kicked off overseas fund raising by Indian entities with a $1.25 billion issue last month. It was soon followed by the Exim Bank with a $500 million sale. Indian Overseas Bank, Syndicate Bank also plan to raise funds through such bonds to mainly fund Indian companies that seek overseas loans. The revival in issuances from Indian companies is after such sale fell to the equivalent of $140 million last quarter, the lowest since 2009, Bloomberg data shows.
Indeed, the rates are getting better by the day with Exim Bank, with a sovereign backing, managing to better State Bank. While SBI sold its 4.125% five year notes at 375 basis points above similar maturity US Treasuries, Exim managed to sell its 4% similar maturity notes at just about 325 basis points over the Treasuries. Lesser the spread between the yields of the seller's bonds and US Treasuries, the cheaper it is for borrowers.
Borrowers may rush in the next few weeks to take advantage of better state of the European markets before India's potential rating downgrade pushes up the cost of borrowing higher again.
Standard & Poor's, a rating company, lowered India's credit outlook to negative from stable citing slowdown in investment and economic growth, and widening of the current-account deficit which hit a record 4.5% of the gross domestic product for the March quarter. S&P rates India's sovereign long-term debt at BBB-, just a notch above junk.
Source: EconomicTimes
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