Bonds, Currencies & Commodities
ICICI Bank raises SGD 225 million from a 7-year bond sale programme

ICICI Bank had given an initial price guidance of 4%, while the final pricing saw tightening of 0.35%. The issue was oversubscribed by over 13 times to SGD 3 billion, the lead banker to the issue StanChart said


Mumbai: ICICI Bank has raised SGD 225 million (Singapore dollars) from a seven-year bond sale programme through its Dubai branch at a coupon rate of 3.65%, reports PTI.

 

“We have successfully raised SGD 225 million through our Dubai branch at a coupon rate of 3.65%. Significantly, the seven-year bond will also yield 3.65%,” a bank spokesperson told PTI.

 

The bank had given an initial price guidance of 4%, while the final pricing saw tightening of 0.35%. The issue was oversubscribed by over 13 times to SGD 3 billion, the lead banker to the issue StanChart said.

 

This is the fifth debt raising by the private sector bank this fiscal with it earlier in the year raising USD1 billion in two instalments of USD750 million and USD250 million. The bank had also raised a 1 billion yuan bond earlier in the year apart from a 100 million Swiss franc bond.

 

StanChart, HSBC and ANZ were the lead managers to the issue.

 

This was the second issue in 2013, with Exim Bank on 8th January raising USD 750 million through a European bond sale, which was overbought by 8.5 times at a 4% coupon.

 

“ICICI's new issue has established a new benchmark for them in the Singapore-dollar-denominated bond market. It has also helped them achieve investor diversification, raise seven-year pricing tighter than the USD curve, and establish a benchmark for them in the SGD bond market,” StanChart India managing director, capital markets Jujhar Singh told PTI from London.

 

It's heartening to see an Indian issuer pricing 2013's first SGD issue so tight, he added.

 

Singh further said the issue, despite having a seven-year tenor is dearer by only 0.02% as the bank's existing dollar bond maturing by 2018 is priced at 3.63%.

 

The pricing has also been helped by the timing as it came soon after the resolution of the US fiscal cliff apart from the fact that the traders are flushed with cash after the Christmas and the New Year holidays, said Singh.

 

On the tenor extension by two years, he said, ICICI Bank wanted to diversify its investor profile. Also, generally insurers want longer tenor and the bank has quite a few insurers in its investor kitty in Singapore.

 

As much as 36% of the 102 investors were insurers, followed by 31% HNIs of private banks, 17% of fund houses and 16% constituted international banks, Singh said.

 

Majority of these investors are from Singapore (78%). 19% of the investors were from Greater China and 3% were from Europe.

 

On the rationale for the huge demand for Indian debt, Singh said since September there has been a substantial improvement in sentiment about the Indian growth as since then the sovereign downgrade threat has eased.

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SAT to hear Reliance Industries’ appeal against SEBI

In May 2012, SEBI tightened the regulations for settlement through consent framework, as a result of which many cases including those related to insider trading, cannot be settled through this mechanism

Mumbai: The Securities Appellate Tribunal (SAT) will hear Reliance Industries’ appeal against SEBI (Securities and Exchange Board of India) in a case related to rejection of a settlement plea filed by the corporate major with the market regulator, reports PTI.

 

Reliance Industries (RIL) had sought to settle certain investigations into alleged violation of insider trading norms in sale of shares of its erstwhile subsidiary Reliance Petroleum, but the application to settle the matter under SEBI’s consent framework was rejected by the regulator.

 

While there were no official word on the contents of the appeal, sources said that RIL has challenged SEBI’s decision to reject its application and also the changes made by SEBI in the regulations governing settlement of cases through consent mechanism—especially for cases already under consideration.

 

Under SEBI’s consent mechanism, companies can seek to settle cases with the market regulator after payment of certain charges and disgorgement of any ill-gotten gains.

 

In May 2012, SEBI tightened the regulations for settlement through consent framework, as a result of which many cases including those related to insider trading, cannot be settled through this mechanism.

 

RIL’s appeal against SEBI (Securities and Exchange Board of India) was earlier scheduled to be heard by SAT for admission purpose on 4th January, but the Tribunal adjourned the hearing to 11th January.

 

SEBI on 3rd January made public a list of 149 consent applications, including 16 from various entities related to RIL group, which it had found unsuitable for settlement through consent process.

 

These include applications of RIL itself, as also various group companies and that of RIL chairman Mukesh Ambani’s close aide Manoj Modi.

 

As per SEBI, these 149 consent applications were rejected as they were not found to be in consonance with the revised guidelines. SEBI said that proceedings in these cases will continue in accordance with law.

 

These include 13 applications from various entities in a case involving alleged violation of SEBI regulations for “Prohibition of Fraudulent and Unfair Trade Practices” in a matter of RIL’s erstwhile subsidiary Reliance Petroleum.

 

Besides, there are three applications related to alleged violation of “Prohibition of Insider Trading Regulations” in the matter of another erstwhile RIL group company—Indian Petrochemicals Corporation (IPCL)—which used to be a government-owned company and was later acquired by Mukesh Ambani-led group as part of a disinvestment exercise.

 

Both the companies, Reliance Petroleum and IPCL, used to be separately listed entities, but were later acquired by RIL and got delisted from the stock exchanges. The merger process for RPL was completed in 2009.

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Loss-making discoms a drag on states’ finances: RBI

Pitching for periodic tariff revisions, the Reserve Bank of India said losses of discoms have also raised “serious concerns” for banks and financial institutions

New Delhi: The RBI (Reserve Bank of India) said that the loss-making power distribution companies (discoms) continue to impact financials of states and cautioned against their restructured debt liabilities turning into non-performing assets for the state governments, reports PTI

 

Pitching for periodic tariff revisions, the central bank said losses of discoms have also raised “serious concerns” for banks and financial institutions.

 

Faced with mounting debts of state-owned discoms, whose overall losses stood at Rs1.9 lakh crore till March 2011, the Union power ministry has come up with a debt rejig scheme, where one of the conditions is that 50% of short term liabilities are taken over by respective state governments.

 

“Strict enforceability of conditions associated with the restructuring package has to be ensured so that ... financial stability in the economy is not threatened by the restructured loans turning into non-performing assets,” the RBI said.

 

In its annual report “State Finances: A Study of Budgets of 2012-13” just released, RBI said financial losses of state power discoms continue to act as a “drag on finances of states”.

 

RBI said non-revision of tariffs, subsidy arrears, high cost of buying short-term power and high distribution losses are among key reasons for financial ill health of discoms.

 

“As the discoms have largely availed of short-term borrowings from banks and financial institutions to cover cash losses, it has raised serious concern not only for the discoms but also for the banks/ financial institutions that have lent to them,” the apex bank said.

 

State governments support discoms through various direct and indirect channels. These include subsidies and grants in lieu of subsidised power provided to certain categories such as agricultural and domestic consumers.

 

The central bank emphasised that turnaround plan for discoms can be successful only if certain conditions such as “elimination of the gap between average revenue realised and average cost of supply as early as possible through periodic tariff revisions” are in place.

 

Late last year, the power ministry had notified financial restructuring scheme for discoms that includes converting 50% of their short-term debt into bonds backed by states.

 

“The restructuring/ re-scheduling of loan is to be accompanied by concrete and measurable action by the discoms/ states to improve the operational performance of the distribution utilities,” the ministry had said.

 

Besides, the government is working on a State Electricity Distribution Responsibility bill, which would have stringent norms to ensure good performance of discoms.

 

The RBI said the restructuring scheme, if implemented in the right spirit, “may get rid of one of the most daunting problems of state finances by turning state discoms into financially viable units.”

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