BRICS New Development Bank issues second COVID-19 Response bond

The US$2 billion 5-year bond has an issue yield of 0.695% and is listed on the Irish Stock Exchange 

2nd BRICS NDB COVID-19 Response bond will be used to finance sustainable development activities in the NDB’s member countries [NDB]

The inaugural COVID-19 Response bond was issued in June 2020. The second BRICS New Development Bank (NDB) COVID-19 Response bond will be used to finance sustainable development activities in the NDB’s member countries, including emergency assistance loans to the BRICS member countries.

Such emergency loans could be used to finance direct expenses such as procuring personal protection equipment for health care workers related to the fight against the COVID-19 outbreak or provide support to governmental measures such as income relief measures contributing to economic recovery in the member countries of the NDB. Brazil, China, India and South Africa have already received funds. NDB has approved USD 4 billion of COVID-19 related emergency assistance projects to date. 

The NDB said the transaction met exceptional high-quality investor support, with strong participation from central banks and official institutions, which represented 75% of allocations.

The geographic distribution of investors of the final bond book was: Asia – 57%, EMEA – 34%, Americas – 9% compared with 56% – Asia, 29% – EMEA, 15% – Americas for the first bond.

“We are grateful for the enthusiastic response from investors to our second benchmark transaction which supports NDB’s fight against the COVID-19 outbreak in our member countries. The transaction resonated well with investors and led to an extremely high-quality book, which saw a significant contribution from central banks and official institutions,” Leslie Maasdorp, the NDB Vice President and Chief Financial Officer said. 

Bank of China, Barclays, Citi, Goldman Sachs International and Standard Chartered Bank acted as lead managers for the bond. China Construction Bank, Industrial and Commercial Bank of China Limited, HSBC, Nomura, TD Securities, Royal Bank of Canada acted as co-managers for the bond.

In December 2019, the NDB registered its inaugural US$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. 

The NDB aims to provide up to US$10 billion in crisis-related assistance. At its fifth annual board meeting in April, the NDB said that is cognizant that the spread of the Covid-19 pandemic has caused unimaginable hardship and suffering for millions of people around the globe.

It noted that the governments of BRICS countries, in close partnership with multilateral fora and international development community, have reacted proactively and pledged unprecedented fiscal and monetary stimulus packages to respond to adversity and challenges caused by COVID-19 outbreak.

Helmo Preuss in Langebaan, South Africa for The BRICS Post

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