ICICI Bank, Axis Bank likely to raise ₹5,000cr each via bond sales

December 07, 2022

Private sector lender ICICI Bank is likely to raise up to ₹5,000 crore through the issuance of long-term bonds on Thursday, sources told Business Standard.

The bonds, which are likely to have a maturity of seven years, include a base size of ₹1,000 crore and a greenshoe option of ₹5,000 crore, the sources said. The securities are senior unsecured redeemable long-term bonds in the nature of debentures.

“It is likely that ICICI Bank would set a fixed coupon of 7.63 per cent for the bonds,” a source said. On Tuesday, yield on the 10-year benchmark government bond settled at 7.25 per cent while that on the most liquid seven-year government bond closed at 7.22 per cent.

Sources said that another large private lender, Axis Bank, was also looking to raise funds through the issuance of infrastructure bonds worth ₹5,000 crore.

“Axis bank is also trying for an infra bond issue placement with a large insurance company. They might want the pricing of the bond close to ICICI Bank. It depends on the response from the insurance company on the anchor amount and their views on pricing,” the source said.

Banks have recently embarked on a spree of capital raising through bond issuances. This comes at a time when bank credit off-take continues to sustain at near-historic highs, putting pressure on banks to mobilise funds to finance the loan demand amid slower deposit growth.