ICICI Bank priced $750M in five-year dollar bonds at 105 bp over Treasuries, its second such deal in a month. Kotak Mahindra and Yes Bank are preparing their own issues.
ICICI Bank priced a $750 million five-year dollar bond at 105 basis points over the equivalent U.S. Treasury, a two-basis-point tightening from the initial price talk. The deal is the lender's second international bond sale this month. Strong institutional orders let the bank tighten pricing into the close, bankers familiar with the matter said.
Kotak Mahindra Bank and Yes Bank are preparing their own international bond issues, the bankers said, suggesting Indian banks see a window of favorable dollar funding costs before any shift in global rate expectations. The ICICI deal drew demand from sovereign wealth funds, asset managers, and bank treasury desks across Asia, the Middle East, and Europe.
The 105-bp spread over Treasuries places ICICI's paper inside the secondary curve for top-tier Indian bank dollar bonds. The bank's last dollar deal, a $600 million 5.5-year note in early February, priced at 115 bp over Treasuries. The tighter pricing on the current deal reflects both the shorter tenor and the market's comfort with ICICI's credit profile after reporting a 15% net profit rise for the December quarter.
For the three banks, the bond market offers an alternative to domestic rupee funding at a time when the Reserve Bank of India has kept the repo rate at 6.5%. Dollar issuance lets them lock in fixed-rate funding in a currency that matches their trade-finance and overseas lending books, reducing currency mismatch.
ICICI Bank's Alpha Score sits at 57 out of 100, in the Moderate band, reflecting a credit profile that analysts describe as well-capitalized with stable asset quality. The bank's Tier 1 capital ratio stood at 16.7% in December, above the regulatory minimum.
The five-year maturity is a sweet spot for Asian bank dollar bonds this year. Issuers get access to a deep investor base without paying the premium that longer tenors carry in a yield curve that remains inverted at the long end. Investors get a pick-up over U.S. corporate single-A paper, which trades inside 90 bp over Treasuries for five-year maturities.
Kotak Mahindra Bank and Yes Bank have not disclosed the size or tenor of their planned offerings. Bankers said both are in early-stage conversations with potential bookrunners and are likely to come to market in March, depending on market conditions. Yes Bank, which has a lower credit rating than ICICI or Kotak, would likely pay a wider spread.
ICICI Bank plans to use the proceeds for general corporate purposes and to fund its overseas branches, the bank said in a filing. The deal was arranged by Barclays, Citigroup, HSBC, and Standard Chartered.
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