New Development Bank (NDB) is a Multilateral Development Bank (MDB) established by the BRICS countries (the Federative Republic of Brazil, the Russian Federation, the Republic of India, the People’s Republic of China and the Republic of South Africa) under the Agreement on the New Development Bank signed in 2014. NDB began operations in July 2015 and is headquartered in Shanghai.

NDB’s the Articles of Agreement (AoA) mandate that the Bank will mobilize resources for infrastructure and sustainable development projects in BRICS and other emerging market economies and developing countries (EMDCs), complementing the existing efforts of multilateral and regional financial institutions for global growth and development.

The Bank has authorized capital of USD 100 billion, of which USD 50 billion has been subscribed equally by the five founding members. The Bank’s initial subscribed capital is comprised of paid-in capital of USD 10 billion and callable capital of USD 40 billion.

NDB’s membership is open to all members of the United Nations and expansion of the Bank’s membership is envisaged in NDB’s AoA and General Strategy. In terms of NDB’s General Strategy, the Bank’s membership expansion will include an appropriate mix of EMDCs as well as advanced countries, and will be conducted with a view to ensuring geographic diversity as well as a reasonable mix of countries of different sizes and at different stages of development. The combined voting power of NDB’s founding members will be maintained at a minimum of 55%.

As a supranational institution, NDB is self-regulated rather than regulated by any national regulator.

NDB actively engages in partnerships with peer MDB’s to complement their efforts in supporting global growth and development. More specifically, NDB cooperates with other MDBs in areas of mutual interest, including exploring and pursuing opportunities for co-financing projects, facilitating knowledge exchange and research, provision of technical assistance, exchange of human resources and others. NDB has signed memoranda of understanding with African Development Bank, Asian Development Bank, Asian Infrastructure Investment Bank, Development Bank of Latin America, Eurasian Development Bank, European Bank for Reconstruction and Development, European Investment Bank, Financial Fund for the Development of the Countries of the Plata Basin, Inter-American Development Bank, IDB Invest, International Investment Bank and World Bank Group.

NDB’s debt instruments are not direct obligations of any of its members. NDB debt instruments are however collectively backed by the callable capital commitments of its member countries.

NDB has been assigned a long-term issuer credit rating of “AA+” by S&P Global Ratings, Long-Term Issuer Default Rating (IDR) of “AA” by Fitch Ratings, and “AAA” international credit ratings by Japan Credit Rating Agency (“JCR”) and Analytical Credit Rating Agency (“ACRA”). NDB’s credit strength is based on (1) Excellent capitalization through its subscribed and paid-in capital; (2) Extraordinary shareholder support; (3) Sound and prudent risk management policies; (4) Preferred creditor status; (5) Strong expertise of the Bank’s management team; among others.

NDB’s euro medium-term note (EMTN) programme is established under the Regulation S format and the bonds issued thereunder will be listed on the Euronext Dublin-Irish Stock Exchange (ISE). NDB has also established a number of local currency programmes. Bonds issued under these programmes will be listed on the respective stock exchange or OTC market designated by country regulations. NDB’s ZAR bond programme is listed on Johannesburg Stock Exchange, it’s RUB bond programme on the Moscow Exchange and its RMB bond programme in the China Interbank Bond Market. NDB’s ECP offerings are not listed.

NDB’s funding programme is expected to be approximately USD 5-6 billion equivalent per annum and will develop further based on the Bank’s funding needs, market conditions and investor appetite. NDB will be a regular issuer in both hard currency and the local currencies of its member countries, and Bank will look to build a liquid benchmark curve over time with issuances across different maturities.

NDB bonds issued under the EMTN programme are cleared and settled through Euroclear and Clearstream system. NDB local currency bonds issued under its domestic bond programmes are cleared through the designated systems of the country where the programmes have been established.

NDB plans to become a regular issuer in hard currencies as well as the local currencies of its member countries, with issuances based on market conditions, investor demand, and requirements of its lending portfolio.

NDB’s Sustainable Financing Policy Framework governs the Bank’s issuances of green, social and sustainability debt instruments, including the use and management of bond proceeds, the project selection and evaluation process, and reporting and disclosure.

In 2016, NDB became the first MDB to issue a Green Bond in China Interbank Bond Market. The issuance was aligned with ICMA’s green bond framework and the People’s Bank of China’s Green Bond Guidelines. Similarly, NDB’s debut bond under its EMTN Programme was labelled as a Covid Response Bond and its proceeds were used to fund the medical and social response of the Bank’s member states to the COVID-19 outbreak.

In general, all projects which NDB finances are designed and implemented in a way that avoids, mitigates or compensates for adverse impacts on the environment and social groups, in compliance with the standards set in the Bank’s Environmental and Social Framework, as well as relevant environment and social country systems.

NDB bond details should be visible via electronic media, such as Bloomberg under the ticker: < NDEVBB >. NDB’s website contains a dedicated section for borrowing activities, and includes a broad range of investor marketing materials. Further questions may be addressed to the Funding Team email: funding@ndb.int.

NDB primarily uses the proceeds from the sale of its bonds to finance infrastructure and sustainable development projects in the Bank’s member countries, in line with its mandate. If, in respect of any particular bond issuance, NDB has identified a specific use of proceeds, this will be stated in the applicable bond issuance documentation.

NDB invests its treasury funds in a range of eligible assets according to the Bank’s policies and regulations. Eligible assets include bank deposits, bonds and money market funds. For Treasury counterparties, at least 90% of the investment portfolio must be highly rated and have an international credit rating no lower than A- by S&P, Fitch or Moody’s. The remaining 10% of the investment portfolio may be invested in instruments which have an international rating of below A- but BBB- or higher from S&P, Fitch or Moody’s.

To fulfill NDB’s mandate of mobilizing resources for infrastructure and sustainable development projects, the Bank provides project-linked loans or guarantees to sovereigns, national financial institutions, international organizations and non-sovereign borrowers, and invests in private equity funds. The majority of NDB’s lending is in hard currency to sovereigns or on a sovereign-guaranteed basis, however the Bank also lends to non-sovereign borrowers and promotes lending in the local currency of its members.

NDB recognizes that local currency financing can improve the creditworthiness of projects and enables the Bank to better meet the demand for infrastructure financing irrespective of macro-economic volatility. NDB funds local currency loans with local currency issuances or via the swap markets with highly-rated counterparties while limiting the Bank’s net open position to USD 20 million.

As a modern MDB with a lean organizational structure, NDB has a rigorous project appraisal process and aims to structure, negotiate, review and approve loans within a period of six months without compromising its risk management standards and credit quality. As part of the assessment of each project, the project team identifies different risk factors that can impact the project performance, including non-financial risks. In that sense, risk factors encompass those related to credit risk, but also environmental & social risks and legal and reputational risks. Risk factors are collectively analyzed by the Bank’s Credit and Investment Committee before the proposed transaction is recommended to the Board of Directors for approval.