The development reflects the high borrowing costs for Indian corporates who have more than $125 billion of overseas debt coming up for repayment this year.
International investors are demanding higher rates as the European sovereign crisis has heightened risk-aversion among EU banks, one of the biggest lenders to Indian companies.
ICICI Bank decided not to pay at least 50% more in coupon than the bonds it raised in 2009 at 5.75% and has opted to wait for rates to ease once the EU crisis abates, the two people said.
"Any fresh bond-raising would be evaluated based on market conditions and new lending opportunities," the bank said in an email response. "ICICI Bank has repaid the bonds using its existing liquidity.
The bank's existing liquidity and incoming repayments from its foreign currency asset portfolio are adequate to meet repayment obligations on bonds and bilateral & syndicated loans."
The cost of borrowing in dollar-denominated bonds for Indian companies has shot up to more than 600 basis points above the benchmark London Interbank Offered Rate (Libor), from about 350 basis points in the first half of 2011, say investment bankers.
Most Indian companies that borrowed overseas due to lower interest rates are at the receiving end after the rupee slid 16% last year, inflicting losses on many.
(Source- http://economictimes.indiatimes.com)
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