The first development bank created by the BRICS nations, has recently issued its first tranche of bonds. The “green” Bonds were issued in U.S. Dollars (USD) and the money raised will be used for financing “green” projects backed by the banking institution’s sustainable financing policy.
BRICS Development Bank Announces 3-year ‘Green’ Bonds
The New Development Bank (NDB) of the BRICS group has established a three-year contract. Quoted by Tass News Agency, the bank reported on September 25, that they had released bonds in the amount of $1.25 billion on the international capital markets.
The benchmark bond of $50 billion was issued under the Euro Medium Term Note Program and the NDB registered a number of registrants in December 2019. The net proceeds will be used as a source of financing or refinancing for “green” projects as specified in the NDB’s Sustainable Financing Policy Framework.
“The issuance represents NDB’s return to the international capital markets and is also the first USD Green Bond issued by the bank, demonstrating its commitment to sustainable capital markets,” the institution declared in a statement.
The NDB was launched by BRICS under an agreement between the member states – Brazil, Russia, India, China. South Africa – which was signed on July 15, 2014 and came into effect one year later. It provides financial solutions to build a “more inclusive and resilient future.”
The Bank noted that this activity was well received by “high-quality investors,” with 78% of the final allocation going to central bankers and official institutions and the remaining allocated to banks treasuries, asset managers and other financial organizations.
NDB’s ‘Green’ Bonds Attract Investors From Many Continents
“The geographically diverse book had in excess of 50 investors from Asia, Europe and the Americas … Citi, Crédit Agricole CIB, HSBC, and ICBC acted as the joint lead managers to the issuance. CACIB also acted as the Green Structuring Advisor,” NDB Vice President and Chief Financial Officer Leslie Maasdorp was quoted as saying.
This transaction has allowed NDB to successfully re-enter the USD Bond market. Our investors have demonstrated their solid confidence in NDB’s credit … The Bank and our member countries have a large number of green and sustainable projects.
With a starting capital of $100 billion, the BRICS countries and other developing nations can access funding for projects related to sustainable development and infrastructure. The government has endorsed more than 100 projects worth $32.8 billion, including transportation, water supply and clean energy, as well as digital and social infrastructure and urban construction.
The NDB has been able to secure long-term financing on the international and domestic capital markets, after receiving an AA+ rating from Fitch Ratings and S&P Global Ratings. In spite of putting new transactions in place in Russia after Moscow’s invasion of Ukraine, Fitch Rating downgraded the company to ‘negative’ in early 2009, but began to implement its long-term issuers default scale in March of last year.
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