ICICI Bank Plans First Dollar Bond Since 2017 After RBI Concession

ICICI Bank Ltd is in talks to raise at least $500 million in offshore bonds, people familiar with the matter said. The lender plans to use its Global Medium-Term Note programme, a dedicated debt issuance route. The sale would be its first benchmark-sized dollar bond under that facility since 2017, according to Bloomberg-compiled data.

The proposed offering comes after the Reserve Bank of India announced a concessional foreign-exchange swap facility for eligible overseas borrowings last month. The central bank aims to attract global capital and support the rupee. Several Indian lenders have lined up similar plans. HDFC Bank raised $750 million through a debt sale last month. Axis Bank, State Bank of India and Power Finance Corp have also accessed international markets, Bloomberg data show.

The RBI's steps have helped arrest the rupee's decline. The currency has gained nearly 2% since hitting a record low of almost 97 to a dollar in late May. The energy shock from the US-Iran war had triggered the sharp slide.

The swap facility reduces the cost of hedging for banks borrowing abroad. That makes dollar debt more attractive relative to rupee funding. Traders said the concession could narrow the gap between onshore and offshore funding costs for Indian banks.

ICICI Bank did not reply to a request for comment. The lender is talking to a group of global banks arranging the deal, the people said.

The GMTN programme allows ICICI Bank to issue bonds in multiple currencies and tenors. The last benchmark dollar bond under this programme was in 2017.

The rupee has stabilised after the RBI's intervention and the swap facility. It traded near 95 per dollar recently, up from the record low of 97. The central bank has used a combination of spot sales and swaps to manage the currency.

The swap facility effectively subsidises the cost of hedging for banks. That makes dollar debt cheaper than rupee funding for some tenors. Traders said the arbitrage could encourage more banks to tap offshore markets, adding to dollar supply and supporting the rupee.

ICICI Bank carries an Alpha Score of 57, a moderate reading in the financial services sector. HDFC Bank, which raised $750 million last month, scores 46.

The timing of the sale is not yet set. The people said discussions are private and terms could change. The next test for demand will come when ICICI Bank launches the bond.