Sept. 4 (Bloomberg) -- ICICI Bank Ltd., India's biggest lender to consumers, said it raised $1.5 billion in overseas loans to meet growing credit demand in the world's second most populous nation.

The Mumbai-based bank got the loans in three portions of $500 million each, maturing in 364 days, three years and five years respectively, it said in an e-mailed statement. It didn't exercise an option to borrow an additional $500 million.

The loans carry spreads comparable to the cost when ICICI borrowed the yen equivalent of $1 billion in December, according to an e-mail from Calyon, one of the arrangers. Loan rates to Indian banks haven't risen because they lend mainly at home and don't have credits in the U.S. subprime mortgage market.

``This is a well-capitalized bank, particularly after raising $5 billion in equity capital in June,'' said Singapore- based Murthy Nuni, who manages $300 million including Indian equities as a managing director at Marshall Fund Partners. ``The bank has no exposure to U.S. subprime and has a leading position in Indian retail banking.''

Still, the bank will pay more for the money because the three-month London interbank offered rate, a benchmark for borrowing costs, has risen to the highest since 2001 amid fallout from the subprime meltdown.

Loan Spreads

ICICI Bank's one-year debt will pay a margin of 15 basis points more than Libor. The three-year loan will pay a premium of 38 basis points and the five-year credit 55 basis points more than Libor, according to the statement. A basis point is 0.01 percentage point.

In December, the bank paid 15, 25 and 38 basis points above Libor for one-, two- and three-year credit.

Ten banks arranged the financing, the biggest dual-currency borrowing by an Indian bank, including BNP Paribas, Bayerische Landesbank, Goldman Sachs Group Inc., HSBC Holdings Plc and Natexis, the statement said. They also brought in 18 participating firms including DBS Bank Ltd. and Woori Bank.

The five-year loan will be repaid in two equal installments at the end of 4 1/2 years and five years, ICICI said. The bank signed the loan agreement in Singapore today, it said.

ICICI can choose to access the loans in yen or U.S. dollars, Chief Financial Officer Vishakha Mulye said in a telephone interview from Mumbai. The bank may not immediately access the money, she added.

Credit Growth

ICICI Bank is raising funds to meet growing credit demand in the world's fastest-growing major economy after China. India's central bank estimates the $875 billion economy will grow 8.5 percent in the year to March 31.

ICICI Bank sold $5 billion of shares in June to local and overseas investors.

India's debt spread rose to 260 basis points more than U.S. Treasuries at the close on Aug. 30, according to JPMorgan Chase & Co.'s Asian Credit Index. That compares with about 141 basis points at the beginning of this year.

The average yield, or spread, on emerging-market dollar bonds over U.S. Treasuries reached 2.36 percentage points as of Aug. 30, according to JPMorgan Chase & Co.'s EMBI Plus index. The spread was 1.74 percentage points at the beginning of the year.

To contact the reporters on this story: Sumit Sharma in Mumbai at sumitsharma@bloomberg.net. Denise Kee in Singapore at Dkee2@bloomberg.net

Last Updated: September 4, 2007 05:24 EDT