NDB successfully placed 3 bln RMB bond in China Interbank Bond Market

The New Development Bank (NDB) successfully placed CNY 3 bln RMB-denominated bond in the China Interbank Bond Market on 25 February 2019. The bond was placed in two tranches with maturities of 3 years (RMB 2 bln) and 5 years (RMB 1 bln) and it was priced at the lower end of announced pricing range with coupon rates of 3% and 3.32% respectively.

“The NDB successfully raised RMB 3 bln at very attractive price levels, which marks another formidable milestone for the Bank. Pricing of the bond is a good reflection of the NDB’s high credit quality,” said Mr. Leslie Maasdorp, NDB VP & CFO. “In line with the NDB’s General Strategy, the Bank intends to become a regular issuer in local currency markets of its member countries. The Bank is currently awaiting regulatory approvals to issue local currency debt in a number of markets of its member countries,” he added.

The bond was more than 3 times oversubscribed with more than 20 orders from domestic state-owned, joint-venture and rural banks, fund companies, securities companies, foreign banks and sovereign funds. The orders were balanced from onshore and offshore investors. For tranche-1 (3-year bond), China Mainland represented 56% of investors, Europe – 21%, Singapore – 8%, Macau SAR – 8% and HK SAR – 7%, while for tranche-2 (5-year bond) China Mainland represented 57% of investors, Europe – 20%, HK SAR – 18% and Japan – 5%.

“We are very pleased with the outcome of the RMB bond issue. The Bank was able to diversify its investor base, and we are encouraged by the fact that a significant part of our investor base comes from regions outside of Mainland China. The geographical distribution reflects a strong demand from global investors for China local currency bonds issued by a highly rated international issuer,” commented Mr. Leslie Maasdorp.

The NDB is the first overseas entity which received Renminbi Bond Programme approval by the National Association of Financial Market Institutional Investors (NAFMII), with the total size of 10 bln yuan (approx. USD 1.5 bln), under the Interim Measures for the Administration of Bonds Issued by Overseas Issuers on the National Interbank Bond Market announced by People’s Bank of China (PBOC) and China’s Ministry of Finance (MoF). The Bond became the first offering of the Bank under the Renminbi Bond Programme.

“We are honored to be the first international issuer of Panda Bonds after a joint announcement of Panda Bond Interim Measures by PBOC and MoF. The NDB is committed to support China’s efforts to internationalize its capital markets”, said Mr. Leslie Maasdorp.

Industrial and Commercial Bank of China Limited acted as the lead underwriter and bookruner, Bank of China Limited, Agricultural Bank of China Limited and China Construction Bank Limited acted as the joint lead underwriters for the Bond.

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.

Background information

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.