New Development Bank to issue $449m Chinese green bond

In addition to renminbi, the BRICS-focused lender intends to raise debt denominated in the local currencies of its members.

The New Development Bank, also known as the BRICS Development Bank, will issue its first green bond on China’s onshore market next Monday. 

The CNY3 billion ($449 million; €403 million) security, with a five-year tenor and an annualised interest rate of between 2.8 percent and 3.6 percent, will mark the first such issuance by a multilateral development bank under guidelines issued by the People’s Bank of China last December, NDB said in a statement. 

Under existing rules, NDB’s renminbi bond is not a Panda bond since the bank is headquartered in Shanghai (Panda bonds are renminbi bonds issued by non-Chinese issuers). The proceeds will be used to finance green projects in BRICS countries.   

NDB received approval for its bond issuance from the central bank earlier this month. The lender plans to launch bond sales totalling CNY10 billion in tranches, with the second tranche to be rolled out within the next few months. 

“This is a significant milestone for the bank and the green bond would help fulfil the sustainable development mission of the bank. Furthermore, the NDB funding strategy will aim to ensure that the bank contributes to the development of local capital markets in our member countries,” said K. V. Kamath, NDB’s president. 

The bank has registered significant interest in the bond, with more than 40 international and domestic Chinese investors attending a meeting held on Tuesday. “The majority of buyers will be Chinese institutions, but the bank will look at broadening its investor base amid further financial liberalisation on the mainland,” said the bank’s chief financial officer Leslie Maasdorp during the meeting. 

“The NDB intends to obtain an international credit rating to broaden its access to global capital markets. In addition to USD-denominated and other hard currencies, the NDB will raise debt in local currencies of our members.”

The NDB, set up by the BRICS countries last year with an initial capitalisation of $50 billion, approved its first batch of project worth a total of $811 million this April. These include renewable energy projects with a total capacity of 2.4GW.