ICICI Bank hits Chinese bond market with benchmark issue

India’s largest private sector lender ICICI Bank has hit the Chinese debt market for a benchmark issue of about $500 million.

According investment banking sources, ICICI's three-year tenor benchmark issue is to be issued to the offshore Chinese investors and will be denominated in the renminbi or yuan.

An initial pricing guidance of 4.125 per cent has been offered by the bank. The sources, however, did not offer any further details.

This is the third issue by ICICI Bank and makes it the second domestic lender to sell bonds to offshore Chinese investors after IDBI Bank's issue earlier on.

After lying low for the past one month or so, domestic corporates are back to the overseas debt market, according to experts. Meanwhile, rating agency S&P has given a BBB- rating to the senior unsecured renminbi notes.

In a statement from Singapore, Standard & Poor's rating reflects the long-term counter-party credit rating on the bank.

"The proposed notes will constitute direct, unconditional, unsecured, and unsubordinated obligations of ICICI Bank. They shall at all times rank at par among themselves and with all other unsecured obligations of the bank. The proposed notes will be listed on the Singapore exchange," S&P said.

It can be noted that since between January and April, over a dozen corporates went on an aggressive debt raising spree, ratcheting up a whopping $11 billion, led by the $1.5-billion double issue by Bharti Airtel and a $800-million perpetual bond issue by Reliance Industries.

That apart, Exim Bank also raised nearly $1 billion in three instalments including  the first ever bond sale in Australia, around SGD 500 million by Tata Communication in two installments, HDFC Bank, and a clutch of state-run banks also raised foreign debts during the year.

However, Canara Bank's $1-billion issue is still pending even though it had planned to raise the US dollar money last month-end, sources said.

Domestic companies in the entire 2012 had raised $10 billion. According to i-bankers, companies are mopping up foreign debt as interest rates are at their lowest levels in the Western markets while they are still too high in the domestic market.

At the mid-quarter review of the monetary policy on Monday, the Reserve Bank left the rates unchanged, possibly shutting any room for banks to slash their deposit rates.