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On December 1, 2021, the New Development Bank (NDB) priced its 3-year USD 500 million SOFR-linked floating rate Pandemic Support and Sustainable Bond. This transaction has become the first floating rate benchmark of the Bank and its fifth USD benchmark bond offering in the international markets.

The net proceeds from the Bond will be used for financing sustainable development activities and providing COVID-19 emergency support loans to the member countries of the Bank. The Board of Directors of the NDB approved nine emergency support loans totaling approx. USD 9 billion in response to the adverse health, social and economic impact of the COVID-19 pandemic. NDB targets to provide a total of USD 10 billion in crisis-related assistance.

The transaction received strong interest from the global investor community following the mandate announcement. The debut SOFR-linked floating rate bond set the spread at SOFR +28bps, with a tightening of 2 bps from initial pricing thoughts. The orderbook was supported by high quality investors. The distribution of investors of the final book was as follows, by geography: Asia – 37.9%, Americas – 33.6%, EMEA – 28.5%, and by investor type: CB/OI – 47%, Bank/Private Bank – 38.7%, Fund Manager – 13.7% and Others – 0.6%.

“The issuance of USD 500 million benchmark bond represents another important milestone for NDB, as it is our first floating-rate note and first SOFR-linked bond. Moreover, it is the Bank’s first bond issue after new member countries joined NDB. The Bond resonated well with investors, as we are consistently targeting issuance to appeal to current investor demand. The transaction is in line with the NDB’s risk-based, prudent and conservative funding and financing strategy. One of its key aspects is diversification of funding by instrument, currency, tenor and type of interest rate,” said Mr. Leslie Maasdorp, NDB VP & CFO. “The transaction is a clear demonstration of the Bank’s successful transition away from LIBOR to the Secured Overnight Financing Rate (SOFR) and NDB’s commitment to using innovative financial instruments in its funding activities.”

Barclays, Citi, Deutsche Bank, Goldman Sachs International and TD Securities acted as joint lead managers for the transaction.

Bond Summary Terms

Issuer New Development Bank (NDB)
Issuer rating AA+ (S&P) / AA+ (Fitch) / AAA (JCR) / AAA (ACRA)
Format Reg S, Category 2
Notional amount USD 500,000,000
Settlement Date 09 December 2021
Maturity Date 09 December 2024
Issue Price 100%
Coupon FRN, Compounded SOFR+28bps, Quarterly, ACT/360
SOFR Convention SOFR Index where SOFR Index Start and SOFR Index End will be 5 days prior to Interest Period
Listing Regulated Market of the Irish Stock Exchange, trading as Euronext Dublin
Joint Lead Managers Barclays, Citi, Deutsche Bank, Goldman Sachs International, TD Securities

Background information

In December 2019, NDB registered its inaugural USD 50 billion Euro Medium Term Note Programme in the international capital markets. The Programme has been rated “AA+” by Fitch and has been assigned “AA+” long-term and “A-1+” short-term issue ratings by S&P.

NDB was established by Brazil, Russia, India, China and South Africa to mobilize resources for infrastructure and sustainable development projects in BRICS and other emerging market economies and developing countries, complementing the existing efforts of multilateral and regional financial institutions for global growth and development. In 2021, NDB initiated membership expansion and admitted the United Arab Emirates, Uruguay and Bangladesh as its first new member countries.

The NDB received ‘AA+’ long-term issuer credit ratings from S&P and Fitch and ‘AAA’ foreign currency long-term issuer rating from Japan Credit Rating Agency (JCR) and Analytical Credit Rating Agency (ACRA).