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BRICS New Development Bank registers Russian ruble bond programme
November 25, 2019, 5:25 pm

Bank can issue RUB 100 billion bonds with a maximum tenor of 20 years

The first president of the New Development Bank K. V. Kamath speaks at the 2nd annual meet of the new lender in New Delhi on April 1 2017 [Image: BRICS Business Council]

After successfully registering bond programmes in China and South Africa earlier in 2019, the BRICS New Development Bank (NDB) has now registered a RUB 100 billion program on the Moscow Stock Exchange.

It is part of the NDB’s strategy to issue bonds in local currency of the BRICS member states as that eliminates exchange rate risk. The NDB has received regulatory approval for a ZAR 10 billion local currency bond programme in South Africa.

The NDB was assigned an ‘AAA’ foreign currency long-term issuer rating with a stable outlook by Japan Credit Rating Agency, Ltd (JCR) on August 20, which allows it issue bonds with a very low coupon rate.

The NDB was established by Brazil, Russia, India, China and South Africa (BRICS) in 2014 to mobilize resources for infrastructure and sustainable development projects in BRICS and other emerging economies and developing countries, complementing the existing efforts of multilateral and regional financial institutions for global growth and development.

To fulfill its purpose, the NDB will support public or private projects through loans, guarantees, equity participation and other financial instruments.

The NDB plans to almost double its loan book to US$ 16 billion this year and increase its impact, as the bank seeks to broaden its global development partnerships and mobilise more institutional and private capital.

In 2018, the NDB approved 17 loans totalling about US$ 4.6 billion, building on its base of 13 loans worth US$ 3.4 billion as of the end of 2017. That brought the total loan book of the bank to 30 projects worth approximately US$ 8 billion by the end of last year.

“NDB has successfully registered its local currency bond program in Russia. Following the successful launch of the China RMB Programme in early 2019 and the registration of the South African Rand Programme in April 2019, this is a further key milestone in the Bank’s strategy to provide local currency financing to our member countries. The size of the program is 100 billion Rubles and it is listed on the Moscow Exchange,” said Leslie Maasdorp, the NDB Vice President and Chief Financial Officer.

“The NDB’s General Strategy prioritizes the use of national currencies of our member countries in our lending and funding activities. We view local currency financing as a key component of NDB’s value proposition, as it mitigates risks faced by borrowers and supports the deepening of capital markets of the Bank’s member countries,” he concluded.

Helmo Preuss in Makhanda, South Africa for The BRICS Post