ICICI's $300m bond deal sets new record

India's largest private-sector lender returns with an aggressively priced $300 million deal that sets a new pricing benchmark.

ICICI Bank, India’s largest private-sector lender, sold the country's tightest senior bank note since 2008, raising $300 million from a five-and-a-half year transaction.

The Reg S sale captured more than $900 million of orders, with more than half of the deal selling to banks and private banking accounts, two sources familiar with the matter told FinanceAsia.

A combination of the tight credit spread environment in Asia, India’s improving credit fundamentals, and the scarcity of paper from emerging markets generally ensured the deal’s success.

“It was an opportunistic deal to pick up an extremely favourable market window,” a syndicate banker said. “The pricing was the tightest ever done by an Indian bank since the 2008 global finance crisis.”

The company, rated Baa3/BBB- by Moody’s/S&P, pitched the deal at an initial 155 basis points over five-year US Treasuries in the Asian morning, before tightening the deal to 135bp to 140bp over. Final pricing of the September 2022 note was fixed at 99.447 on a coupon of 3.25% to yield 3.361%, or 135bp over five-year US Treasuries, according to a term sheet seen by FinanceAsia.

ICICI's two outstanding bonds – a $500 million 3.125% August 2020 note and a $700 million 4% March 2026 note – were the main valuation yardsticks. The former traded on a G-spread of 123bp and the latter yielded a G-spread of 171bp.

State Bank of India’s January $550 million 3.25% January 2022 bond was an alternative comparable. The bond, rated Baa3/BBB-/BBB-, traded on a G-spread of 128bp.

Based on ICICI’s outstanding yield curve, fair value for the new deal was at 142bp above five-year US Treasuries, according to syndicate bankers’ estimates. Adopting SBI’s curve and taking a eight-month curve extension of 7.5bp, the estimated fair value spread was more like 135.5bp above US Treasuries.

“The new ICICI bond was priced inside its outstanding curve and its larger counterpart,” the syndicate banker said. 

In secondary over-the-counter trading during Asian hours on Friday, the Singapore-listed bond was little changed ahead of its settlement date on March 9. 

Investors in Asia and EMEA took 82% and 18% of the entire deal, respectively. By investor type, banks/private banks took 58% and fund managers/insurers 34%, with the remaining 8% going into others.

The joint bookrunners of the deal were Bank of America Merrill Lynch, HSBC, JP Morgan, MUFG, and ICICI Bank Singapore branch.

¬ Haymarket Media Limited. All rights reserved.

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