NDB issues first bonds worth USD 449 mln for green projects

BRICS' New Development Bank today issued its first bonds worldwide worth about USD 449 million to raise funds for clean energy projects in member states.

The five-year green bonds, denominated in the Chinese currency renminbi or yuan, are worth 3 billion yuan (USD 449 million) and were sold in China's onshore interbank bond market.

It was the first time in seven years that a global financial institution based in Shanghai has issued the yuan-denominated bond in China.

The bonds attracted investors from home and abroad.

At its roadshow last Tuesday, more than 40 domestic and overseas institutional investors subscribed to the bonds, state-run Xinhua news agency reported.

Eminent Indian banker and NDB president K V Kamath said the issuance was a milestone for the multilateral development bank.

It may help boost sustainable development and serve as a signal of support for capital markets in BRICS countries, Kamath said.

He said the bank will support more clean and renewable energy use to reduce carbon emissions.

Issuance of the yuan-denominated bonds shows the confidence international financial institutions have in the Chinese currency and could promote the internationalisation of the yuan, Chen Siqing, governor of the Bank of China, said.

Bank of China is the lead underwriter. Other underwriters include China Development Bank, China Construction Bank, Industrial and Commercial Bank of China, HSBC and Standard Chartered.

The NDB also plans to issue another 10 billion yuan in green bonds in China in the next six months, said Leslie Maasdorp, NDB's vice president and chief financial officer.

The bank is also planning to sell bonds in Russia and India to fund green projects there, Maasdorp said.

The NDB was jointly founded by the BRICS countries—Brazil, Russia, India, China and South Africa—in July 2014 and officially opened for business a year later.

China has become the world's largest green bond market, with bonds issued in the first half of the year reaching 75 billion yuan, 33 per cent of the world's total, according to Zhang Xin, deputy director of the People's Bank of China Shanghai headquarters.

China's green bond market has huge growth potential as its green industries need total investment of two trillion yuan annually, while the government can only fund 10 to 15 per cent of the total, Zhou Guannan, an analyst with Huachuang Securities, said.