ICICI Bank's $1.45B syndicated loan joins a wave of Indian bank dollar fundraising after the RBI cut hedging costs. Lenders have raised $2.58B since June.
ICICI Bank Ltd. is tapping overseas debt markets for about $1.45 billion through a syndicated offshore loan, according to people familiar with the matter. The move adds momentum to a wave of Indian banks raising foreign-currency funding after a Reserve Bank of India facility cut the cost of hedging against rupee swings.
The Mumbai-based lender, the country's second-largest private bank, first signed a $1 billion loan agreement with Bank of America Corp., the people said. The deal is now being upsized to other banks including Mizuho Bank Ltd., Mashreqbank PSC and United Overseas Bank Ltd.
The four-year loan carries a margin of 110 basis points over the Secured Overnight Financing Rate, the people said. More lenders could join during syndication, potentially increasing the loan size at the same pricing, according to two of the people.
The syndicated loan follows ICICI Bank's $1 billion five-year bond sale last month – its first international debt offering in nearly a decade. A representative for the bank declined to comment, as did Bank of America, Mizuho and Mashreqbank. UOB also declined to comment.
The surge in offshore fundraising by Indian financial institutions picked up in June, when the RBI introduced a concessional foreign-exchange swap facility. The central bank offers a fixed annual rate of 1.5% for swaps with an average maturity of at least three years, well below prevailing market costs. The facility closes by December 31, prompting banks to accelerate dollar borrowing while the window remains open.
Indian banks have raised $2.58 billion from dollar bonds and loans between June 8 and the end of July, according to the latest central bank data. ICICI Bank's $1 billion bond and the new loan account for the bulk of that total.
The bank was also in talks to raise another $500 million in offshore bonds to take advantage of the facility, Bloomberg News reported earlier. ICICI posted better-than-expected profit for the quarter ended June, supported by loan book growth of nearly 20%.
IBN stock page carries an Alpha Score of 57, rated Moderate, in the Financial Services sector. The RBI's swap window is the primary near-term catalyst for the offshore issuance trend among Indian lenders.
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