ICICI Bank completes $340 million Tier-I bond issue

ICICI Bank has become the first Indian bank to issue Tier-I subordinated perpetual bonds in the international markets. The bank has raised $340 million from the issue, which would augment its Tier-I capital base.

Perpetual bonds have no maturity and are hence considered part of Tier-I capital. ICICI Bank, however, has the option to redeem the bonds after a period of 10 years with the permission of RBI.

The issue, lead managed by JP Morgan, Merrill Lynch and Morgan Stanley, attracted strong investor interest with a total order book of $3.6 billion. 37 per cent of the bonds were issued to US-based investors, 33 per cent to European investors and the remaining 30 per cent to Asian investors.

The non-cumulative bonds carry a coupon rate of 7.25 per cent per annum and were priced at 194 basis points over LIBOR or 247 bps over the 10-year US treasury yield.

Addition to the Tier-I capital would help ICICI Bank to raise additional Tier-II capital proportionally and postpone further equity dilution for some time. Like other Indian private sector banks, ICICI Bank has also been witnessing very strong credit growth over the last few years. The bank had raised capital through 2 separate equity issues in the domestic markets over the last couple of years.