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ICICI bonds: nice buy, hard to find

The overseas bonds issued by India's financial services firm ICICI Ltd offer attractive spreads, security and price stability, Merrill Lynch said in recent report. There's just on problem. They're scarce. Good luck trying to buy one.

Merrill said ICICI's 7.125 per cent bond maturing in 2003 was being quoted at 200/180 basis points over US Treasuries, while the 7.77 per cent 2007 was quoted at a spread of 290/270 basis points.

The report noted the prices of the infrequently traded bonds had been very stable the past 18 months.

ICICI, a term lender until transforming itself into a universal bank, remains among the higher rated Indian financial institutions in the market, said that the report dated May 10.

It said ICICI was also moving towards international best practices.

The report was prepared after ICICI posted a lower-than-expected net profit of Rs 5.37 billion for the year to March.

ICICI said it set aside Rs 8.13 billion for non-performing loans in the fourth quarter, taking the total for the year to Rs 14.21 billion.

"While its asset quality measures appear superior by domestic and regional standards, in the international context ICICI's problem assets are well above average," Merrill said.

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