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BRICS New Development Bank issues inaugural 3-year bond
June 19, 2020, 11:24 am

The $1.5 billion bond has an issue yield of 0.66 per cent and is listed on the Irish Stock Exchange

The NDB has been making emergency loans to help member states combat COVID-19 [NDB]

The BRICS New Development Bank (NDB) COVID-19 Response will be used to finance sustainable development activities in its member countries, including emergency assistance loans to the BRICS member countries.

Such emergency loans could be used to finance direct expenses such as procuring personal protection equipment for health care workers related to the fight against the COVID-19 outbreak or provide support to governmental measures such as income relief measures contributing to economic recovery in the member countries of the NDB.

China and India have already received funds, while South Africa has applied for a $1 billion loan.
The NDB said the transaction met exceptional high-quality investor support, with strong participation from central banks and official institutions, which represented 75% of allocations.

The investor geographic distribution of the final bond book was as follows: 56% – Asia, 29% – EMEA, 15% – Americas.

“We are pleased with the overwhelmingly positive investor feedback and the very top quality order book for our inaugural COVID-19 Response Bond in the international markets. This bond issue is strategically important in addressing the economic and social challenges that our member states are facing in their fight against the COVID-19 outbreak,” Leslie Maasdorp, the NDB Vice President and Chief Financial Officer said.

Citi, Credit Agricole CIB, Goldman Sachs International, HSBC and J.P. Morgan acted as lead managers for the bond. Bank of China, Barclays, DBS Bank Ltd., Industrial and Commercial Bank of China Limited, Mizuho Securities, Standard Chartered Bank, TD Securities acted as co-managers for the bond.

In December 2019, the NDB registered its inaugural US$50 billion Euro Medium Term Note Programme in the international capital markets. The Programme has been rated “AA+” by Fitch and has been assigned “AA+” long-term and “A-1+” short-term issue ratings by S&P.

The NDB aims to provide up to US$10 billion in crisis-related assistance. As at June 17, 2020, the Bank has provided RMB 7 billion Emergency Assistance Program Loan to the Government of China as well as US$1 billion Emergency Assistance Program Loan to the Government of India.

At its fifth annual board meeting in April, the NDB said that is cognizant that the spread of the Covid-19 pandemic has caused unimaginable hardship and suffering for millions of people around the globe.

It noted that the governments of BRICS countries, in close partnership with multilateral fora and international development community, have reacted proactively and pledged unprecedented fiscal and monetary stimulus packages to respond to adversity and challenges caused by COVID-19 outbreak.

“With over US$16 billion in approved projects, and roughly 150 staff compliment, I think we all agree that now is the opportune moment to uncover the full potential and might of this institution,” South African Finance Minister Tito Mboweni said in his speech to the NDB board on 20 April.

Helmo Preuss in Makhanda, South Africa for The BRICS Post