ICICI Bank Nears $500 Million US Dollar Bond Issue Through GIFT City

ICICI Bank is preparing to raise at least $500 million through five-year US dollar-denominated bonds as it looks to benefit from the Reserve Bank of India's (RBI) concessional dollar-rupee swap facility, according to people familiar with the matter.

The proposed issuance will be made through the bank's GIFT City International Financial Services Centre (IFSC) unit under the US Securities and Exchange Commission's Rule 144A, which enables companies to raise capital from Qualified Institutional Buyers (QIBs) in the United States without completing full SEC registration.

The transaction would represent ICICI Bank's first US dollar bond sale in almost a decade. Sources said the bank is expected to announce the fundraising shortly, with the proceeds primarily earmarked for supporting client financing requirements.

A person familiar with the matter said the bonds are likely to be priced at around 90–95 basis points above US Treasury yields, reflecting favourable market conditions.

ICICI Bank did not respond to requests for comment.

RBI's Swap Facility Makes Overseas Borrowing More Attractive

The fundraising follows the RBI's introduction of a concessional swap facility in June, allowing eligible external commercial borrowings by banks and state-owned enterprises to be hedged at a fixed annual rate of 1.5%, compounded semi-annually.

The initiative significantly reduces hedging costs, making overseas dollar borrowing more economical for Indian lenders.

During the bank's post-results media briefing, Executive Director Sandeep Batra said ICICI Bank had partnered with multiple institutions to provide leverage to customers.

He added that financing would be offered based on customer profiles and partner arrangements, enabling clients to access competitive returns.

Indian Banks Increase Overseas Fundraising

ICICI Bank is set to become the latest major lender to utilise the RBI's facility after HDFC Bank and Axis Bank.

HDFC Bank earlier raised $750 million through five-year senior unsecured US dollar bonds issued via its GIFT City IFSC unit. The notes were priced at 90 basis points above US Treasuries, resulting in a yield of 5.067%, making it the first Indian bank to access the RBI's concessional swap window.

Axis Bank later secured $800 million through overseas bond issuances under the scheme, including $500 million in Additional Tier 1 perpetual bonds priced at 6.87% and $300 million in five-year senior unsecured notes.

As of Monday, Indian banks had collectively mobilised $20.7 billion under the RBI's special incentive window within six weeks of its launch. This includes $17.4 billion in FCNR(B) deposits, $2 billion through overseas foreign currency borrowings and $1.3 billion via external commercial borrowings.

The RBI previously introduced a similar facility in 2013, when it attracted around $34 billion in inflows, helping India manage the market volatility triggered by the global "taper tantrum".

Also Read - Stocks To Watch On 22 July