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BRICS Bank Plans Its First Dollar Bond Issue

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The New Development Bank backed by Brazil, Russia, India, China and South Africa (BRICS) is evaluating issuing US $ 1 billion of dollar-denominated bonds next year.

The infrastructure sector lender backed by the BRICS group of nations is planning its first bond issue in dollars by 2019 in order to increase its capacity to extend loans to member countries.

The New Development Bank backed by Brazil, Russia, India, China and South Africa (BRICS) is evaluating issuing US $ 1 billion worth of dollar-denominated bonds next year, chairman KV Kamath said on Wednesday by telephone.

With two international ratings in hand, now is the “right time” to evaluate a bond issue, and the bank hopes to make the next dollar bond arrangement a benchmark in world capital markets, Kamath said. The term could vary from seven to 10 years and presentations should begin in the “next eight to 10 weeks,” he said.

The financial institution started operating in 2015 to support infrastructure projects and sustainable development initiatives in emerging economies. While it has a total portfolio of more than US $ 5,700 million, it only has a bonus in circulation: a panda bonus of 3,000 million yuan sold in 2016.

The bank plans to start a second panda bond program of 10 billion yuan by the end of 2018, depending on market conditions and regulatory approval, Kamath said.

“In the last three years, we have discovered that our members are increasingly expressing the need to finance in local currency,” he said. “We have come a long way to look at the South African rand market, the South African government has expressed great interest in applying for rand loans, and we would like to satisfy that expectation of our target customers.”

However, the bank remains cautious given the increasing volatility of emerging markets amid the constraint of global monetary policy. “I think we should be careful when we enter these markets because we want to make sure we are in the market during a relatively quiet period, which will be something we will consider when we explore local markets,” he said.

The New Development Bank received a credit rating from the long-term issuer AA + of S & P Global Ratings, the rating agency said in a statement sent by email. The bank has the same rating as Fitch Ratings, according to its website.