Private sector lender ICICI Bank has raised Rs 5,000 crore through infrastructure bonds for funding projects in segments like power, roads etc.

The coupon for seven-year paper was fixed at 7.63 per cent, about 25 basis points above yield on government benchmark bonds with similar maturity. This fund raise came a day after the Monetary Policy Committee of the Reserve Bank of India decided to raise policy repo rate by 35 basis points to 6.25 per cent.

The base issue size for ICICI Bank’s infra bonds was Rs 1,000 crore with green shoe option of Rs 4,000 crore. The issue received bids for close to Rs 20,000 crore from investors, debt market sources said.

Debt market sources said besides ICICI, banks who have raised money through infrastructure include Bank of Baroda and State Bank of India. Last week Country’s largest lender State Bank of India had raised Rs 10,000 crore through maiden issue of 10 year infrastructure bonds carrying the coupon 7.51 per cent.

Lenders have collectively raised Rs 19,600 crore via infra bonds till date in the current financial year (Fy23). In Fy22, Indian lenders including Axis Bank and HDFC bank had raised over Rs 27,000 crore through infra bonds.

ICICI Bank’s infrastructure bonds carry “AAA” credit rating from CRISIL. Its outstanding borrowings through infrastructure bonds stood at Rs 40,824 crore at the end of September 2022, up from Rs 22,314 crore a year ago, according to an analyst presentation.

Its fund-based exposure to infrastructure Road, port, telecom, urban development etc was Rs 42,743.5 crore. The exposure to the power sector was Rs 25,150 crore at the end of September 2022, according to regulatory disclosure under Basel III norms.

Infrastructure bonds are long term fully paid, redeemable and unsecured financial instruments. The minimum maturity period for these bonds is seven years.

These bonds are exempted from computation of net demand and time liabilities (NDTL). Therefore, they are not subjected to Cash Reserve Ratio and Statutory Liquidity (SLR) requirements.

Besides using these funds for lending to infrastructure projects, lenders can also deploy money for giving loans for affordable housing.