BRICS Development Bank Launches USD 1.25 Billion 3-Year Green Bonds

BRICS Development Bank Launches USD 1.25 Billion 3-Year Green Bonds

The BRICS Development Bank has launched its first USD 1.25 billion 3-year green bonds. Established by the BRICS group of nations, the first "green" bonds in US dollars (USD) will be used to fund "green" projects supported under the Sustainable Financing Policy Framework of the bank.

NDB Bonds to Finance Eligible "Green" Projects

The New Development Bank (NDB), established by the BRICS bloc, has launched USD 1.25 billion in three-year "green" bonds on international capital markets, the bank announced in a press release on Thursday, as quoted by the Tass news agency.

The 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.

"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 NDB announced in a statement.

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 became effective a year later. It finances solutions aimed at building a "more inclusive and resilient future."

The bank noted that the transaction has seen a strong reception from "high-quality investors," with 78% of the final allocation going to central banks and government institutions and the rest of the amount mostly held by bank treasuries and asset managers.

NDB Bonds Attract Diverse Investors

"The geographically diverse book had more than 50 investors from Asia, Europe, and the Americas... Citi, Crédit Agricole CIB, HSBC, and ICBC were the joint lead managers, while CACIB was the Green Structuring Advisor," the announcement detailed. NDB Vice President and Chief Financial Officer, Leslie Maasdorp, said:

"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 started with a capital of USD 100 billion to finance infrastructure and sustainable development projects in the BRICS nations and other developing nations. It has already approved nearly 100 projects estimated at USD 32.8 billion in 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 after the invasion of Ukraine, Fitch downgraded its rating to ‘negative’ on its long-term issuer default scale in early March last year.

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