New Development Bank eyes bond connect scheme for 5 billion yuan debt sale

PUBLISHED : Tuesday, 29 May, 2018, 11:21am
UPDATED : Tuesday, 29 May, 2018, 11:56pm

The New Development Bank (NDB), which funds infrastructure projects in emerging economies, is planning to raise 5 billion yuan (US$782 million) through a yuan-denominated bond sale in China’s interbank market.

Leslie Maasdorp, the NDB’s vice-president and chief financial officer, said the bond connect scheme that links the mainland and Hong Kong debt markets, could be an ideal platform to conduct the bond issuance.

“Bond connect is a perfect way to achieve one of our objectives – to broaden and deepen the investor base for us,” he told reporters on the sidelines of the bank’s annual meeting in Shanghai on Monday.

The bond issuance, which follows the NDB’s 3 billion yuan debt sale on the mainland two years ago, is part of a 10 billion yuan fundraising programme the lender is carrying out.

Shanghai-based BRICS bank set to raise 3 billion yuan from green bond issuance

The bank expects to conduct the sale of the first tranche in the next few months after clearing a series of regulatory approval procedures, Maasdorp said.

The remaining 5 billion yuan debt sale under the programme will be carried out within the next two years.

“We’ll pick the moment when it is appropriate to do the issue,” he said.

It is likely to be categorised as a green bond, whose proceeds will target mainly clean-energy projects, Maasdorp added.

In July 2016 the Shanghai-headquartered NDB, jointly set up by the world’s major emerging countries – Brasil, Russia, India, China and South Africa (BRICS) – offered its first yuan-denominated bond in Shanghai as a way of replenishing its coffers.

It is one of the two policy banks heavily backed by Beijing to support infrastructure construction in emerging economies as China increasingly wields its economic influence worldwide.

Formerly known as BRICS Development Bank, it was set up in 2015.

The NDB and the Asian Infrastructure Investment Bank, a multilateral lender initiated by Chinese President Xi Jinping, are pitched as alternatives to established global institutions such as the World Bank.

Bond Connect, a mutual market-access scheme launched in July last year, allows investors in Hong Kong to put money into the mainland’s interbank bond market.

Meanwhile, foreign investors are able to buy debt traded in China’s interbank bond market directly through the Hong Kong exchange.

Southbound trading that will allow mainland investors to buy bonds in the Hong Kong market has yet to start.

Also on Monday, the NDB board approved six projects across all five of its member countries, with the total loan amount valued at US$1.7 billion.

The new projects include environmental protection initiatives in Brasil, water and sanitation systems in Russia, rural roads in India, urban development in China, and transport networks in South Africa.

To date, the entire project portfolio funded by the NDB has reached US$5.1 billion.