With the Reserve Bank of India advancing the closure of a concessional swap facility on FCNR(B) deposits by a month to 31 August instead of end-September, several banks have doubled up efforts to raise capital from overseas.

The latest to join the chase is ICICI Bank, with its board approving the offshore borrowing limit to $5 billion from earlier $2.5 billion.

“The money will be raised through issuances of bonds, notes and offshore certificates of deposits in overseas markets for a revised limit of up to $5 billion,” the bank said in a stock exchange filing.

The bank’s got an enabling provision and intends to raise $5 billion through various tranches, maturities and interest rates based on the appetite from fixed income investors and also the pricing.

ICICI Bank has a $7.5 billion medium-term note (MTN) programme. Earlier this week, the private lender raised $750 million through a five-year US dollar bond at a tight spread of 105 basis points over five-year US Treasuries, bringing its total dollar debt fundraising to $2.05 billion. Prior to this, the bank had raised $1 billion in a single-tranche bond in July, the largest single issuance by an Indian lender. Guiding for a price of 130 basis points over the five-year US Treasuries yield, it was able to lower it to 100 basis points. The bond had a coupon rate of 5.46%. 

During the week, banks have been making a beeline to tap international markets to raise money after the RBI curtailed the cut-off deadline for mobilising FCNR(B) deposits under the swap window to 31 August compared to an earlier date of 30 September. 

Besides ICICI Bank, Kotak Mahindra Bank, IDFC First Bank, HDFC Bank and Bank of Baroda raised $4.4 billion together, with an eye on funding leverage schemes for foreign currency non-resident (Bank), or FCNR(B), deposits. 

While the RBI has announced premature closure on the deposit leg, the concessional swap schemes for external commercial borrowings (ECBs) and overseas foreign currency borrowings (OFCBs) will continue to run its full course until 31 December. 

HDFC Bank raised on Thursday $1.75 billion in senior unsecured bonds, its biggest overseas fundraise since 2008. The bank said the dual issuance was through its Gift city Branch in Gujarat. While the first tranche of $500 million three-year bonds will mature on 26 August 2029, the second tranche of $1.25 billion five-year bonds will end on 26 August 2031.

The three-year notes carry a coupon of 5.159%, while the five-year notes offer 5.401%, with interest payable semi-annually. 

The other private lenders who have tapped the overseas debt market include IDFC First Bank, which raised $600 million through overseas bonds, and Kotak Mahindra Bank, which raised $650 million in its debut issuance of five-year bonds.

HDFC Bank was the first to kick-start the bond issuances deluge when in June it became the first lender to tap the overseas bond market with an issuance of $750 million, using RBI’s 1.5% fixed-rate swap facility for ECBs. The bank raised the bond at a fine pricing of 90 basis points over the 5-year US Treasuries.

Axis Bank followed with a capital raise of $500 million through an Additional Tier 1 (AT1) perpetual issue and another $300 million through a senior five-year bond in transaction.

Recently, State Bank of India (SBI) raised Regulation S bonds of $500 million benchmarked against the 5-year US Treasuries and priced it at a spread of 88 basis points over the benchmark.  

Bank of Baroda also raised $700 million through a twin issuance, with $400 million coming from a 3-year bond issuance at 90 basis points over the US Treasuries and $300 million from a 5-year bond issuance at 10 basis points higher than the earlier tranche. 

Meanwhile, Federal Bank said its board has approved raising up to $500 million through foreign currency-denominated bonds through its IFSC Banking Unit in Gift City.