ICICI Bank obtains Rs.2800 Cr. in bonds, stock prices dip

The private lending institution, ICICI Bank, managed to raise over Rs. 2827 crores through bond issuance on a private placement basis.

ICICI Bank’s Board of Directors approved of this fundraising endeavour in April. As per the regulatory filing, the private lending institution allotted a total of 28,274 senior unsecured redeemable long-term bonds, made available in the form of debentures.

Salient pointers about the allotted bonds

• The allotment date for the bonds is 15th June 2021
• The redemption date is 15th June 2028

The allotted bonds do not come with privileges or special rights and were issued at par. They carry a coupon rate of 6.45% per annum that is paid out annually.

The Credit Analysis & Research rated the bonds’ CARE AAA stable’, while ICRA rated it with ‘ICRA AAA stable’. ICICI bank is set to list the bonds in relevant segments of NSE. On Wednesday, the shares of ICICI Bank closed at 0.79% lower at Rs. 639.95 on BSE.

In a nutshell –

Other bond issuances

• Bank of India (BOI) had raised Rs. 602 crores on 26th March through Basel III-compliant additional tier 1 bonds on a private placement basis. The bonds were settled and allotted on 30th March and carried a 9.30% coupon rate.
• HDFC plans to raise up to Rs. 70000 crores through bonds on a private placement basis. The base issue size for secured NCDs would be Rs. 5000 crores and the option to retain oversubscription by Rs. 2000 crores. The mortgage lender plans to offer a coupon rate of 6% per annum on the allotted bonds, and its redemption date is scheduled for 26^thMay 2026.
• The board of the State Bank of India (SBI) plans to raise Rs. 14942 crores through bond issuance between 2021 and 2022. There is no clear information about its status and whether the long-term fundraising will be carried out in single or multiple tranches. Also, it is unclear whether it would be carried out through a private placement of senior unsecured notes or public offer in USD or other convertible currency during the fiscal year.

Conclusion

As a means to cushion the impact of accumulating bad loans in this ongoing pandemic, Indian banks have found refuge in fundraising through bonds. Several banks had previously opted for this method to tide over the financial crisis and could continue to do so to gain access to timely and substantial capital.