India’s ICICI Bank has priced a $1 billion five-year dollar bond at a tighter spread than first indicated. This marks the largest such issue by an Indian private lender in nearly 14 years, according to three bankers. The bank set the coupon at 100 basis points over U.S. Treasuries, down from initial guidance of 130 basis points. This is its first dollar debt sale in nearly nine years. The coupon equals 5.46 percent. The offering drew $3 billion in bids for a base size of $500 million. Bankers spoke on condition of anonymity as they lacked authorization to comment publicly. ICICI Bank did not respond immediately to a request for comment. The deal is the largest dollar bond sale by an Indian private-sector bank and the second largest by any local lender since State Bank of India’s $1.25 billion issue in January 2013. The bank used the central bank’s lower-cost hedging facility after the Reserve Bank of India introduced a swap option last month. This allows eligible external borrowings by banks to be hedged at a fixed 1.5 percent per year. The step reduces hedging costs and makes overseas dollar fundraising more appealing. CreditSights had expected pricing at 95-100 basis points but values the bond at 85 basis points. Analysts noted the bonds were valued similarly to HDFC Bank’s debt and about 10 basis points tighter than State Bank of India’s four-year dollar bonds after duration adjustment. HDFC Bank raised $750 million in June at 92 basis points over Treasuries. Axis Bank issued $800 million in a dual-tranche sale in June. Proceeds will fund general corporate purposes. The bonds are expected to carry ratings of Baa3 from Moody’s and BBB from S&P Global. In 2017 ICICI Bank raised $500 million through 10-year bonds at 3.80 percent. CreditSights upgraded its recommendation on the bonds to outperform.
