The Hindu Business Line : ICICI Bank raises £ 350 m in the sterling market

Mumbai May 12 ICICI Bank is raising £ 350 million under a medium term note programme to mark the inaugural deal in the sterling market from an Indian issuer and also the largest deal in the sterling market from Asia.

The bank has priced its three-year fixed rate offering at a spread of 83 basis points over the UK gilts.

"The deal generated good investor response resulting in the deal being upsized to 350 million. The offering had a 460-million order book with a total of 32 investors," said a BSE announcement.

The offering received 95 per cent participation from the UK and the rest from other parts of Europe.

From an investor breakdown perspective, 80 per cent of the note was sold to fund managers, 17 per cent to insurance agencies and 3 per cent to banks and pension funds.

The offering was lead managed by BNP Paribas, Citigroup, Deutsche Bank AG and Hongkong and Shanghai Banking Corporation.

The notes will settle on May 18, said the announcement.

State Bank of India's medium term note programme has recently been upsized to $5 billion and is listed on the Singapore Stock Exchange.

Targets investors with `sterling' funds

N.S. Vageesh reports from Chennai: ICICI Bank's fund-raising effort in the "sterling market" is being done with a view to diversify its investor base.

This is being done to tap into a number of investors who have access to "sterling" funds and prefer to invest in products offered in the same currency rather than swap them into dollars or euros and invest them elsewhere.

The bank's raising of £350 million (equivalent to nearly Rs 3,000 crore) for a three-year period is being done at a coupon rate of 6.25 per cent (about 46 basis points above LIBOR rates for pound sterling).

That's just a shade over the 6.20 per cent that the bank offers on pound sterling deposits at its Bahrain Branch.

The bank had recently raised about $500 million in the US market (at 54 basis points above the US LIBOR rate).

The money raised abroad through these programs will not be brought into India. It will be kept in its overseas branches and used for international operations.

The bank has operations in 17 countries through branches, wholly owned subsidiaries and representative offices.

The bank has raised nearly $2.5 billion so far under the Medium Term Note (MTN) programme over the last two years.

Companies or banks that require a constant cash flow from debt issuance usually use an MTN programme.

Under the programme, a borrower or issuer of these securities is required to register a shelf prospectus with stock exchanges in London, Luxembourg or Singapore (ICICI Bank's MTN programme is registered with the Singapore Exchange).

The advantage to the borrower is that once a shelf prospectus is filed, they do not need to produce elaborate documentation (a process that can take months) each time they want to raise money.

This makes access to global debt funds easier.

Recently, in March 2007, the bank had raised about 500 million through this mechanism.

The upgrading of Indian sovereign rating to "investment grade" status has helped all Indian entities, including banks such as ICICI Bank, to raise money at finer rates.

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