ICICI Bank Secures Rs 4,000 Crore through Long-Term Bond Private Placement

India’s ICICI Bank has successfully secured Rs 4,000 crore (approximately $53.5 million) through a private placement of long-term bonds. Announced on Tuesday, the unsecured redeemable bonds carry a coupon rate of 7.57% per annum and will mature in 10 years.

These bonds, which do not have any special rights attached, have been listed on the National Stock Exchange (NSE). This initiative is part of ICICI Bank’s ongoing strategy to strengthen its capital base and diversify its funding sources. The bank has demonstrated consistent growth in earnings per share and a high return on invested capital.

Private placements are a common method for companies to raise funds without the complexities of a public offering. By issuing long-term bonds, the bank has opted for a financing solution that provides capital for an extended period, aligning with its strong performance over the past decade.

The fixed annual coupon rate of 7.57% indicates the interest that ICICI Bank will pay to its bondholders until maturity in 2033, positioning it competitively given the bank’s price-to-earnings (P/E) and price-to-earnings growth (PEG) ratios.

It is essential to note that these bonds are unsecured, meaning they are not backed by physical assets. However, they are redeemable, ensuring that the principal amount will be returned to bondholders at maturity.

By listing the bonds on the NSE, investors can engage in buying and selling them in the secondary market, providing liquidity and aiding in price discovery. This is particularly advantageous due to the bank’s low price volatility.

Through this successful private placement, ICICI Bank has illustrated its capability to secure funding even in challenging economic conditions. The bank’s historical performance, marked by accelerating revenue growth and significant dividend increases, highlights its resilience and commitment to delivering strong returns to shareholders.