ICICI Bank dollar debt fundraising tops $2 billion in a month: Bankers

Indian banks have been stepping up fundraising in the US dollar bond market, with ICICI Bank among the most active borrowers in recent weeks. The lender has raised $2.05 billion through dollar-denominated debt over the past month, including a fresh $750 million five-year bond, according to merchant bankers and an exchange filing.

ICICI Bank's latest bond sale

ICICI Bank accepted bids worth $750 million for a new five-year US dollar bond on Tuesday, in what market participants described as its third dollar fundraising in a month. The notes were priced at a spread of 105 basis points over US Treasuries, tighter than the initial guidance of 130 basis points, with a coupon set at 5.4170%. The issuance attracted more than $2 billion in bids, two merchant bankers said, requesting anonymity as they are not authorised to speak to media.

The bank's earlier $1 billion five-year notes, priced on Monday via its IFSC Banking Unit, carry a coupon of 5.410% and mature on August 27, 2031. S&P Global Ratings assigned a 'BBB' rating to the debt, equalising it with ICICI Bank's issuer credit rating, according to an exchange filing. The notes are issued under the bank's $7.5 billion Global Medium Term Note Programme and will be listed on exchanges including the India International Exchange IFSC and the Singapore Exchange.

In July, ICICI Bank raised $1 billion through a five-year dollar bond at 100 basis points over Treasuries, and earlier this month reissued notes at a yield of 5.352%, raising $300 million. The recent $750 million deal brings its total dollar fundraising in a month to $2.05 billion, which bankers said puts ICICI Bank at the top of the chart for dollar debt raised since the RBI announced its swap window for foreign-currency deposits in June.

The bank is also in talks with foreign lenders for a dollar loan worth $1.45 billion, according to the merchant bankers. ICICI Bank did not immediately reply to a Reuters email seeking comment outside regular business hours.

Broader offshore borrowing wave

ICICI Bank's sales are part of a larger wave of Indian lenders tapping overseas markets. On Tuesday, Kotak Mahindra Bank raised $650 million through its maiden dollar bond issue, and IDFC First Bank raised $500 million through its maiden international bond on Wednesday. State-owned Indian Bank raised $400 million through its GIFT City branch, a four-year loan, according to an exchange filing.

HDFC Bank has also been active, having raised $1.75 billion through three- and five-year bonds, following a $750 million issue in June. Its three-year bonds were priced at about 88 basis points above US Treasuries, while five-year bonds were around 100 basis points over; the issue attracted nearly $7 billion of orders. HDFC Bank's borrowings as a share of total liabilities fell from 21% in September 2023 to 11% in June 2026, while deposits grew 14.7% year-on-year in Q1 FY27, but its CASA share declined from 38% to 32% over the same period.

The Reserve Bank of India opened a concessional dollar-rupee swap window in June for eligible foreign-currency borrowings, making overseas funding more attractive. The facility allows banks to swap dollars for rupees at a fixed premium of 1.5% per year, compounded half-yearly, for up to five years. The window for eligible overseas foreign-currency borrowings (OFCBs) remains open until December 31, but the central bank brought forward the closure of the FCNR(B) deposit window to August 31, citing an “encouraging response” and resultant forex inflows.

The role of the RBI swap window

The RBI's swap facility was announced on June 8, initially scheduled to run until September 30 for FCNR(B) deposits. However, after banks mobilised $72.8 billion in foreign-currency inflows under the facility as of August 21—including $65.4 billion in FCNR(B) deposits, $4.9 billion in OFCBs, and $2.6 billion in ECBs—the central bank advanced the close date. The pace of mobilisation accelerated sharply: inflows rose from $40.8 billion on July 31 to $56.9 billion by August 13, adding $32 billion in the three weeks to August 21.

The early closure was prompted by the strong response, and the RBI also allowed swaps for FCNR(B) deposits to be undertaken until September 11. Fresh three-to-five-year FCNR(B) deposits qualify for the concessional swap, and eligible deposits receive regulatory relief on CRR and SLR requirements.

Analysts say the surge in inflows has helped foreign exchange reserves, which rose nearly $10 billion in the week before August 15, with bankers predicting reserves will cross $728 billion by end-August. The borrowings bring additional dollar inflows into India, helping strengthen its external position and supporting its capacity to meet import and foreign currency funding requirements, but they are not necessarily cheap money for banks—hedging costs for the currency swap remain.

Perspectives

Banks and RBI rationale

The RBI, in advancing the FCNR(B) window closure, cited the sustained “encouraging response” and strong inflows, indicating satisfaction with the mobilisation pace. Banks, particularly ICICI Bank and HDFC Bank, see overseas borrowings as a way to boost dollar funding, build rupee liquidity for lending and investment, and improve margins, especially amid lower hedging costs under the swap.

Market analysts

Amit Pabari, MD and CEO of CrForex, noted that while these borrowings bring external-fund inflows and strengthen India's external adequacy, they should not be viewed as cheap, given persistent hedging costs. He argued the greatest advantage is the relative speed and accessibility of global dollar funding, though the swap premium still represents a cost.

The bank exchanges also affect deposit mix and funding strategy, with HDFC Bank's post-merger shift from borrowings to deposits a key driver of its offshore fundraising.