NDB will Launch its First Green Financial Bond in China
The New Development Bank is pleased to announce today the launch of its first Green Financial Bond (Green Bond) in the Chinese inter-bank bond market.
The Green Bond will be issued on 18 July 2016 with an issue size of RMB 3 bln and a 5-year tenor. It will be the first such issuance by a Multilateral Development Bank in China under the guidelines issued by PBOC in December 2015.
Bank of China Limited (BOC) acts as the lead underwriter and book runner for the upcoming bond issue. Industrial and Commercial Bank of China Limited, China Construction Bank Limited, China Development Bank Corporation, HSBC Bank (China) Company Limited and Standard Chartered Bank (China) Limited act as joint underwriters for the Bond.
On 6 July 2016, the Bank received approval for its bond issuance from the People’s Bank of China (PBOC).
K. V. Kamath, President of the Bank said, “This is a significant milestone for the Bank and the Green Bond would help fulfill the sustainable development mission of the Bank. Furthermore, the NDB funding strategy will aim to ensure that the Bank contributes to the development of local capital markets in our member countries.”
At a meeting hosted on 12 July 2016, the Bank saw significant investor interest in the Bond with more than 40 international and domestic Chinese investors attending it showing their confidence in the Bank’s credit story.
Leslie Maasdorp, CFO of the Bank said, “The NDB intends to obtain an international credit rating to broaden its access to global capital markets.” He emphasized that the NDB will actively promote the development of green finance in its future capital raising activities. “In addition to USD denominated and other hard currencies, the NDB will raise debt in local currencies of our members. We are therefore pleased to do our first bond issue in local currency as a green bond in China.”
The Bank would utilize the proceeds raised from the bond issuance to finance green projects in BRICS countries.
Ernst and Young Hua Ming LLP, as the Third Party Verification Agency provided pre-assurance verification report in accordance with the Green Bond guidelines issued by PBOC.
The New Development Bank was created with a vision to support and foster infrastructure and sustainable development initiatives in emerging economies. The Bank will complement the efforts of other existing financial institutions to realize the common goal of global growth. The founding members of the NDB – Brazil, Russia, India, China and South Africa (BRICS) – have brought in capital of USD 1 bln as initial contribution. Most of the policies and procedures for all functional areas of the Bank were approved at the Board of Directors meeting in January 2016. With the signing of the Headquarters Agreement with the Government of the People’s Republic of China and Memorandum of Understanding with Shanghai Municipal People’s Government in February, the Bank has become fully operational.
In April 2016, the New Development Bank announced the approval of its first batch of four projects involving financial assistance of USD 811 mln. These loans support renewable energy projects in BRICS countries of 2.370 MW of renewable energy capacity. With that announcement, NDB gave effect to its intent to fast track the process of delivering infrastructure projects and reduce overall loan processing time having only opened its doors in July 2015.
The NDB is rated AAA by two of the leading domestic rating agencies namely China Chengxin International Credit Rating Co Ltd and China Lianhe Credit Rating Co Ltd.