ICICI Bank to raise Rs 8,000 crore via bonds for transport

ICICI Bank, a private sector lender, will raise up to Rs 8000 crore through infrastructure bonds to finance projects in sectors such as transportation, energy and affordable housing.

According to market sources, private lenders have raised up to Rs. 8,000 crore in the current round, rating agency Crisil has rated bonds worth Rs. 10,000 crore of bonds. Lenders always have the option of borrowing money in tranches.

The issue size is Rs 500 crore and the green-shoe is Rs7,500 crore. The interest rate scenario is unclear due to market volatility. Bond traders say the company's highly rated long-term (10-year) paper will show a coupon of about 7.25-30%.

In an evaluation review, Crisil said the bank is actively funding capacity building projects in the green sector, such as renewable energy, and other sustainable sectors, such as waste disposal and bulk transportation.

However, a capital position and ability to raise capital, steady pre-provisioning profits and comfortable profits and comfortable provisions cover cushion, the credit risk profile of the bank against asset quality risks, CRISIL said.

CRISIL has also stated in its report that the government is focused on building infrastructure and creating jobs. In order to do this, it needs Rs 111 trillion over the next five fiscals according to the National Infrastructure Pipeline report. The contribution of the government was expected to be 42-46%.

The current budget provides financial room, but the corporate bond market will play a very important role as the private sector needs to intervene. According to Crisil, the bond market could contribute well over 68% of the proposed NIP funding.