NDB issues RMB 5 billion Sustainable Development Goals Bond
On March 24, 2021, the New Development Bank (NDB) successfully priced a new 3-year fixed rate RMB 5 billion Bond in the China Interbank Bond Market. The Sustainable Development Goals (SDG) bond was issued under the UNDP Sustainable Development Goals Impact Standards for Bonds (UNDP SDG Standard) as well as the SDG Finance Taxonomy (China) and was issued as a part of the Bank’s RMB 20 billion Bond Programme in the China Interbank Bond Market.
The issuance garnered strong interest from a diversified investor base both onshore in mainland China, as well as offshore. The bond was priced at the tighter end of price guidance at a yield of 3.22%.
NDB has become the first issuer to use the UNDP SDG Standard as well as the SDG Finance Taxonomy (China) in the Debt Capital Market. The transaction garnered notable demand from a geographically diverse investor base. The final order book was in excess of RMB 10 bln, more than 2 times oversubscribed. The geographic distribution of investors was as follows: China mainland-51%, APAC (excl. China mainland)-27.5%, EMEA-15%, Americas-6.5%.
The proceeds of the bond will be fully utilized to finance RMB 7 bln Emergency Program Loan to the People’s Republic of China for Supporting China’s Economic Recovery from COVID-19. This Program is aligned primarily with Sustainable Development Goal 8. Promote sustained, inclusive and sustainable economic growth.
“We are delighted to be the pilot issuer under the UNDP SDG Bond Standards under UNDP China SDG Finance Taxonomy,” said Mr. Leslie Maasdorp, Vice President and CFO of NDB. “NDB has a strong focus on sustainability and development impact in line with the SDGs. In this regards, we map each project to a primary SDG and additional SDGs. Our strategic objective is to mobilize funds for those projects that generate positive economic, social and environmental benefits for society as well as bridge the financing gap to achieve the SDGs.”
“It is encouraging to see the positive reaction by investors to this SDG bond issued by NDB, which marks the first instance globally of a multilateral development bank putting UNDP’s SDG Finance Standards to the test,” said Ms. Beate Trankmann, UNDP Resident Representative in China. “The enthusiasm by the capital market demonstrates the important role that NDB can play in leveraging finance to support the attainment of the SDGs. We are excited to join hands with NDB, taking this pioneering first step to provide lessons and evidence that investing in the SDGs can generate economic return as well as social and environmental benefits.”
“The New Development Bank, a pioneer MDB issuer in the panda bond market, has yet again closed another milestone transaction,” said Mr. Hu Kun, the General Manager of the Investment Banking and Asset Management Department of the Bank of China Limited. “Sustainable development has always been a spotlight in China’s market, the NDB’s strong SDG focus and the bond offered exactly matches the market interest, and the result of such collaboration is a well-accepted bond with 51% allocated to onshore investors and 49% allocated to offshore investors, pricing through the secondary market valuation of the NDB’s outstanding bond by 2bps.”
The Bank of China Ltd. acted as the lead underwriter and bookrunner of the issuance. Industrial and Commercial Bank of China Ltd., Agricultural Bank of China Ltd., Bank of Communications Co., Ltd., Deutsche Bank (China) Co., Ltd., DBS Bank (China) Limited, CITIC Securities Co., Ltd acted as the joint lead underwriters for the Bond.
In December, 2020, the NDB and the United Nations Development Programme (UNDP) exchanged official letters and established a channel of communication and technical knowledge exchange to advance SDG finance.
The 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 economies and developing countries, complementing the existing efforts of multilateral and regional financial institutions for global growth and development. According to the NDB’s General Strategy, sustainable infrastructure development is at the core of the Bank’s operational strategy for 2017-2021. 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).
On October 28, 2020, the NDB has successfully registered its second RMB Bond Programme in the China Interbank Bond Market. The NDB has been granted approval to raise up to RMB 20 billion in the China Interbank Bond Market within 2 years of the Programme registration date. The proceeds of the Programme will be used to finance infrastructure and sustainable development projects in the Bank’s member countries. Bond offerings under the Programme will be eligible to institutional investors in the China Interbank Bond Market as well as offshore RMB investors through the Bond Connect scheme between Mainland China and Hong Kong.