India’s largest private sector bank in terms of assets, ICICI Bank, on August 5 priced its first public offshore bond transaction in 2015 as it took advantage of a narrow issuance window to print a US$500 million offering.
The Reg S five-year issue was priced at 99.574% with a coupon of 3.125% to offer a yield of 3.218%. This represented a spread of 160bp over the US treasuries, or at the tight end of the final price guidance of between 160bp and 165bp.
The transaction was announced at Asia open on August 5 with an initial price guidance of 180bp area. In doing so, it managed to tap into an issuance window ahead of the summer holidays in the US and Europe and after nearly a month of volatility due to news around Greece, the commodity prices, the Chinese equity turmoil and the expected US Federal Reserve action.
The offering gained traction among investors and garnered good interest from high quality Asian and European accounts. At Asia close and with an order book in excess of US$1.5 billion, the arrangers announced a final price guidance of between 160bp and 165bp.
The bonds were priced at zero new issue concession – a rare achievement for an issuer in the current market condition and reflecting the latent demand for high quality Indian paper. With this deal, which re-opened the international bond market for Indian banks, ICICI achieved its historic low coupon of 3.125%.
The final order book amounted to US$1.75 billion from over 151 accounts, with 43% of the bonds distributed in Asia, 42% in Europe and the Middle East, and 15% in offshore US. Asset and fund managers were the biggest buyers with 65%, followed by banks with 17%, sovereign wealth funds and agencies 7%, insurance companies and pension funds 7% and private banks 4%.
The bonds, issued through ICICI Bank’s DIFC (Dubai) branch, are drawn under its US$7.5 billion global medium-term note programme.
Bank of America Merrill Lynch, Barclays, HSBC, J.P. Morgan and Standard Chartered were the joint bookrunners and lead managers for the transaction.
ICICI last tapped the US dollar bond market in December 2014 as it re-opened its 3.5% March 2020 bonds for another US$200 million, bringing the total bond size to US$700 million.
