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BRICS Bank Carves 100% Green Niche with First Loan Rollout


The vice-president of the New Development Bank, Paulo Nogueira Batista Junior, tells GlobalMarkets how his institution is lending on projects and issuing green bonds in line with the increasing concern with environmental issues

The New Development Bank (NDB) will start disbursing its first loans by the end of the year, Paulo Nogueira Batista Junior, the vice president of the so-called BRICS bank said yesterday. A second bond issue is scheduled for early next year in China.

The NDB was officially launched last year by five large emerging market countries (Brazil, Russia, India, China and South Africa) amid a great deal of scepticism in the West. The first disbursements on five projects that have already been approved.

“The five projects approved by the board total $811m in commitments, one in each of the five founding member countries. They are all projects in the renewable energy area,” he told GlobalMarkets. “Disbursements on all of them will be made during the last quarter of this year.”

The bank is hiring personnel to increase its staff from the current 65 to 300 in two years. All of its member countries, some of them hit by recession or a severe financial crisis, have contributed equally to the initial $750m capital of the bank in January.

The NDB has issued its first bond this summer and raised the equivalent of $450m. “It is a green bond in RMB. For now, we are 100% green on the assets and on the liability size,” he said. The five year bond in RMB yielded 3.07% and was three times oversubscribed, he said.

Nogueira said a second local currency denominated bond will be issued in India in the first quarter of 2017. “They are very interested in local currency lending,” said Takehiko Nakao, president of the Asian Development Bank (ADB).

Nogueira added: “The NDB is focusing on using local currency in its funding and in the loans, so that they do not generate foreign exchange issues, and we started with the RMB.”


He has denied that China has showed less interest in the NDB following the launch of the Asia Infrastructure Investment Bank (AIIB). “China has enough resources and its strategic vision allows it to work simultaneously with us and with the AIIB. AIIB is a very much China-led. It has veto power over the AIIB, none of our countries has a veto power in our bank,” he said. “Our green bond issue was to a large extent due to the support of the Chinese central bank and the Shanghai municipal government.”

Green bonds have been growing very rapidly in the international capital markets lately in several parts of the world, in line with the increasing concern with environmental issues. “Bond proceeds will be fully allocated to projects that are considered green,” said Nogueira Batista.

The Brics bank expects to get an international credit rating from one of major agencies next year.

The bank, which was originally crafted as an alternative to the World Bank, has put a strong focus on green infrastructure. “Our goal is to achieve in the next five years at least two thirds of our commitments [placed] in sustainable renewable infrastructure energy, like solar energy, wind farms, et cetera, and contribute to environment related issues,” he said.

Source : By Thierry Ogier