March 20, 2012 / 3:42 PM / 6 years ago

ICICI Bank picks banks for up to $1 bln bond issue

MUMBAI (Reuters) - ICICI Bank (ICBK.NS) plans to raise up to $1 billion through a 10-year overseas bond issue as early as this month, two sources with direct knowledge said, signalling a pick-up in overseas bond issuances on improved global liquidity.

A man leaves an automated teller machine (ATM) facility of ICICI bank in Kochi August 6, 2009. REUTERS/Sivaram V/Files

ICICI Bank, the country’s top private lender, has hired Citigroup (C.N), Bank of America Merrill Lynch (BAC.N), HSBC (HSBA.L) and Standard Chartered (STAN.L) for the issue, said the sources, declining to be named as the process is not public yet.

“We continously keep exploring various avenues of fund raising in form of public bond issuances and private placements under the GMTN, based on market conditions and pricing apart from loans and money markets,” the bank spokesman said.

GMTN refers to the global medium term notes programme.

ICICI Bank’s planned bond launch and pricing would depend on market conditions, said one of the sources on Tuesday.

Indian issuers of overseas bonds, kept on the sidelines by volatile markets, are looking once again at the dollar market after energy conglomerate Reliance Industries (RELI.NS) cracked open the route with a $1 billion, 10-year bond deal last month.

Axis Bank (AXBK.NS), India’s third-biggest private lender, swiftly followed with a $500 million, September 2017 issue at a spread of 440 basis points over the U.S. Treasuries, to become the first lender to issue a dollar bond since May.

ICICI Bank last month raised $160 million through a one-year floating rate notes at 200 basis points over three-month Libor, according to IFR.

Many Indian issuers are in talks with investment banks to explore the possibility of overseas fund issues or to revisit plans shelved due to poor investor sentiment because of the euro zone debt crisis last year, analysts said.

Earlier this month, state-run Indian Overseas Bank (IOBK.NS) picked seven banks to raise $500 million through bonds from the overseas markets.

Companies including Union Bank of India (UNBK.NS), Essar Group software services firm Aegis, and Bharti Airtel (BRTI.NS) may also soon look at reviving their dollar fund raising plans.

Investor interest has picked up significantly for Indian issuers especially at the current levels, bankers said.

Issuers are exploring fundraising opportunities abroad for their expansion plans as domestic interest rates remain high, they said. The Reserve Bank of India has raised rates 13 times in the last two years.

The rate hikes have paused but not many expect a drastic fall in the interest rates as inflation remains high.

Editing by Helen Massy-Beresford

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