BRICS Bank to Kick-Off Fund Raising with Yuan Denominated Bonds in China

BEIJING: The five-nation BRICS bank is launching its first fund raising drive with a yuan or renminbi (the official currency of the People’s Republic of China) denominated bond targeting investors in China. The National Development Bank (NDB), as it is called, expects to raise 3-5 billion yuan ($460-767 million) in the second quarter of this year.

“The New Development Bank planned to issue its first bond in China because the renminbi value is much more stable (compared with local currencies of other BRICS nations). China has a deep, liquid bond market,” China Daily quoted Leslie Maasdorp, chief finance officer of NDB, as saying at an event in Henan province.

The bank, sponsored by BRICS nations- Brazil, Russia, India, China and South Africa, will also raise funds in US dollars in the coming months. There are no immediate plans to raise funds in currencies of other BRICS countries. For China, fund raising in yuan is important because it will take forward its agenda for internationalizing the renminbi.

NDB plans to borrow $1.5 billion from the market through bonds in the next two years. It became operational at its head quarters in Shanghai last month. The NDB is expected to announce the first batch of projects it is funding next month.

NDB secured a AAA rating from two Chinese credit rating firms: China Chengxin Credit Rating Group and China Lianhe Credit Rating Co Ltd. The top-notch rating would ensure a low funding cost for the bank.

The bank has a total paid up capital of $10 billion, which will be provided by the five member countries in seven installments. It recently received the first installment of $750 million.

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