ICICI Bank rating unchanged following tap bond offer: Moody’s

Moody’s Investors Service said ICICI Bank’s credit rating for an existing unsecured note remains unchanged at Baa2 following the announcement of a tap bond offering.

ICICI Bank has announced a $250 million tap bond offering, which has the same terms as the existing $750 million 4.7% 2018 senior unsecured notes. The unsecured notes were issued through the Dubai branch as part of $5 billion medium-term note programme.

The outlook on the ratings remains stable, Moody’s Investors Services said.

Tap bonds defined

Tap issue is a procedure that allows borrowers to sell bonds or other short-term debt instruments from past issues. Usually, the bonds are issued at their original face value, maturity and coupon rate. Such bonds are, however, sold at the current market price. Issue on tap is suited for smaller fund-raising attempts.

Moody’s has a standalone bank financial strength rating of D+ for ICICI Bank, mapping to a baseline credit assessment BCA of baa3 on the long-term scale.

“We believe that the probability of systemic support for ICICI Bank is very high, given its sizeable retail deposit franchise and its importance to the national payments system as India’s second largest commercial bank.

Therefore, the long-term local currency deposit and foreign currency senior unsecured debt ratings receive a one-notch rating uplift from its BCA”, the international rating agency said.

The foreign currency senior unsecured debt rating at Baa2 is at the same level as the foreign currency debt ceiling for India.

The bank’s foreign currency deposit ratings of Baa3/P-3 are constrained by the sovereign ceiling.

srivats.kr@thehindu.co.in