New Development Bank issues Coronavirus Combating Bond raising RMB 5 bln
On April 2, 2020, the New Development Bank successfully issued a 3-year RMB Coronavirus Combating Bond in the China Interbank Bond Market. The Bank raised RMB 5 bln, garnered interest from a high-quality diversified investor base both onshore in mainland China, as well as offshore. The bond was priced at the lower end of the announced pricing range, and the transaction represents the largest-ever RMB-denominated bond as well as the first RMB-denominated Coronavirus Combating Bond issued by multilateral development bank in China.
The aim of this bond issue is to support the Chinese Government in the financing of public health expenditure in Hubei, Guangdong and Henan provinces that are hit the hardest by COVID-19. The proceeds of the bond will be fully utilized to finance the RMB 7 bln Emergency Assistance Program Loan to the People’s Republic of China approved by the Board of Directors of the Bank on March 19, 2020. This loan will contribute in a material fashion to improving the resilience of the public health sector in the three provinces.
“Since the outbreak of the Novel Coronavirus Disease – 19 (COVID-19) in December 2019, the lives of people and the economy have been heavily impacted,” said Mr. Leslie Maasdorp, NDB Vice President and CFO. “NDB is fully committed to supporting our member countries during this period of crisis to fight the spread of COVID-19 and stand ready to provide the necessary financing to this objective.”
The Coronavirus Combating Bond met an extraordinary demand from investors. The final order book was in excess of RMB 15 bln, more than 3 times oversubscribed. The bond distribution was well balanced between onshore and offshore investors. The distribution by geography was as follows: China mainland – 41%, EMEA – 45%, APAC (excl. China mainland) – 14%. The bond investor distribution by investor type: Central banks/Official institutions – 54%, Banks/Bank treasuries – 45%, Securities – 1%. The high-quality final orderbook, with notable participation from central banks and official institutions, is a testament to the strength of the New Development Bank’s credit quality.
“We are pleased with the strong demand, pricing and the overall exceptional result of this RMB Coronavirus Combating Bond in the China Interbank Bond Market. This RMB bond issue is strategically relevant to our mandate of promoting sustainable development and deepens our commitment to raise funding in the local currency of our member countries. The funding from NDB will specifically provide much-needed emergency support during this period of crisis in our member countries, who are all facing new economic challenges and human hardship,” said Mr. Leslie Maasdorp.
Industrial and Commercial Bank of China Limited acted as the lead underwriter and bookrunner. Bank of China Limited, Agricultural Bank of China Limited and China Construction Bank Limited acted as the joint lead underwriters for the bond.
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. To fulfill its purpose, the NDB will support public or private projects through loans, guarantees, equity participation and other financial instruments. According to the NDB’s General Strategy, sustainable infrastructure development is at the core of the Bank’s operational strategy for 2017-2021. In August 2018, the Bank received AA+ long-term issuer credit ratings from S&P and Fitch.
In July 2016, the NDB successfully issued its first Green Financial Bond with the issue size of RMB 3 bln and tenor of 5 years in the China Interbank Bond Market. In February 2019, the NDB successfully issued its first Panda Bond with the size of RMB 3 bln in the China Interbank Bond Market.