BRICS Bank makes a bold move with $1.25 Billion ‘Green’ Bonds in USD Bond Market

New Development Bank Launches First Green Bonds in USD to Fund Sustainable Projects

The New Development Bank (NDB), established by the BRICS group of nations, has announced the issuance of its first “green” bonds in U.S. dollars (USD). The proceeds from this placement will be used to fund “green” projects supported under the banking institution’s sustainable financing policy. The NDB has placed three-year “green” bonds on international capital markets in the amount of $1.25 billion, according to a press release on Thursday, quoted by the Tass news agency. The benchmark bond has been issued under the $50 billion Euro Medium Term Note Program registered by the NDB in December 2019. The net proceeds will be used to finance or refinance eligible “green” projects, as defined in the NDB’s Sustainable Financing Policy Framework.

This 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 NDB was created by BRICS under an agreement between the member states – Brazil, Russia, India, China, and South Africa – which was signed on July 15, 2014, and entered into force a year later. It finances solutions aimed at building a “more inclusive and resilient future.”

The bank noted that the transaction has seen strong reception from “high-quality investors,” with 78% of the final allocation going to central banks and official institutions and the remainder being taken up mostly by bank treasuries and asset managers. 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 commenting: “With this transaction, NDB has successfully re-tapped into the USD bond market. Our investors have demonstrated their solid confidence in NDB’s credit … The Bank has a robust pipeline of green and sustainable projects in all our member countries to finance.”

The Shanghai-headquartered bank was set up to finance infrastructure and sustainable development projects in the BRICS states and other developing nations. It has already approved nearly 100 projects for $32.8 billion in areas such as transportation, water supply, clean energy, digital and social infrastructure, and urban construction. The NDB was able to attract long-term funding in international and local capital markets after previously receiving AA+ credit ratings from Fitch Ratings and S&P Global Ratings. Despite putting new transactions with Russia on hold right after Moscow’s invasion of Ukraine, Fitch downgraded its rating to ‘negative’ on its long-term issuer default scale in early March last year.

With a starting capital of $100 billion, the NDB is committed to financing sustainable development projects and infrastructure in the BRICS nations and other developing countries. The bank’s success in issuing green bonds in USD demonstrates its commitment to sustainable development and its ability to attract high-quality investors from all over the world. It is expected that the NDB will continue to expand its issuance of green bonds in USD and other currencies to fund sustainable development projects in the years to come.

Martin Reid

Martin Reid

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