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ICICI Bank to raise Rs 10,000 cr via infra bonds in one or more tranches

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Private sector lender is likely to raise up to Rs 10,000 crore in infrastructure bonds for project financing and .

The long-term instruments carry the benefit of exemption from maintaining and statutory liquidity ratio (CRR and SLR) requirements. This helps them mitigate asset-liability management (ALM) issues faced in extending project loans to infrastructure.

Market sources said the bonds, rated “AAA” by Icra, could be issued in one or more tranches based on requirements and market conditions.

ICICI Bank’s borrowing through long-term infrastructure bonds stood at Rs 38,809 crore at end of June 2022, up from Rs 22,139 crore a year ago, according to the lender’s investor presentation for Q1FY23.

In August 2022, Bank of Baroda had raised Rs 1,000 crore via these bonds at a coupon of 7.39 per cent. It has approval to raise up to Rs 5,000 crore.

Long-term infra bonds should have a maturity of at least seven years. should have first provided assistance to such infrastructure projects before raising resources through bonds. RBI also allows exclusion from Adjusted Net Bank Credit (ANBC) for funds raised through long-term bonds for financing infrastructure and low-cost housing, subject to certain limits.

With the thrust in capital expenditure for supporting economic growth, investments and credit to infrastructure sector including roads, ports and power has also been rising. The banking sector’s loans to the infrastructure sector rose by 11.1 per cent on a year-on-year (YoY) basis to Rs 12.14 trillion in July 2022. However, last year the lending was flat, with just 0.3 per cent YoY growth in July 2021, according to RBI data.

About half the loans in the infrastructure space are for power projects (Rs 6.27 trillion), followed by the roads (Rs 2.79 trillion).

The high incidence of stressed infrastructure assets had made banks, especially private sector lenders, wary of extending fresh loans to projects in the sector.

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