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New Development Bank prices USD 2 billion benchmark bond to further support COVID emergency response
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  • The New Development Bank's (NDB) latest issue in the international capital markets represents another strong step forward in developing its yield curve.
  • The USD-denominated 5-year COVID Response Bond is yet another demonstration of NDB's commitment to fighting the coronavirus outbreak in its member-countries.
  • This transaction continues to broaden NDB's high-quality investor base, with continued strong participation from central banks and official institutions, allowing for 3 basis points spread tightening.

SHANGHAI, Sept. 24, 2020 /PRNewswire/ -- On September 22, 2020, the New Development Bank (NDB) priced its USD 2 billion, 5-year COVID Response Bond in the international capital markets, following its inaugural issuance on June  16,  2020. This is the NDB's largest-ever USD benchmark bond to date.

The net proceeds of the bond issuance will be used to finance sustainable development activities in the Bank's member countries, including COVID-related emergency assistance programs. NDB is targeting to provide up to USD 10 billion in crisis-related assistance, including financing healthcare and social safety-related expenditures, as well as supporting economic recovery efforts. NDB has approved USD 4 billion of COVID-19 related emergency assistance projects to date.

The transaction marks NDB's second foray into the international capital markets following a highly successful inaugural benchmark issuance. The transaction garnered notable demand from a geographically diverse investor base, and substantial participation from central banks and official institutions, which accounted for 66% of final allocations. The geographic distribution of investors of the final bond book was: Asia – 57%, EMEA – 34%, Americas – 9%.

The 5-year benchmark bond was issued at a spread of 37 bps over mid-swaps and pays a fixed annual coupon of 0.625%. Bank of China, Barclays, Citi, Goldman Sachs International and Standard Chartered Bank are acting as lead managers of the bond issuance.

"We are grateful for the enthusiastic response from investors to our second benchmark transaction which supports NDB's fight against the COVID-19 outbreak in our member countries. The transaction resonated well with investors and led to an extremely high-quality book, which saw a significant contribution from central banks and official institutions," said Mr. Leslie Maasdorp, NDB Vice President and Chief Financial Officer. "I would like to express my appreciation to investors for their continued support for NDB and our sustainable development mandate. It allows us to work together with our member countries to respond to the adverse public health and economic challenges caused by the pandemic."

Qiu Wei, Deputy General Manager, Investment Banking & Asset Management Department at Bank of China  said: "The successful pricing of the USD bond not only demonstrates NDB's market impact and JLMs' expertise, but also strengthens the ties between NDB and its member countries. Furthermore, this issuance will help push forward NDB's efforts to help member countries in fighting the challenges brought by the COVID-19 epidemic."

Harry Koppel, Managing Director, SSAR Origination at Barclays  said: "Huge congratulations to the New Development Bank for this remarkable result on their second-ever USD benchmark transaction in the international capital markets. NDB took another large step forward, issuing both a larger size and at a longer tenor than its debut issue. And indeed, this was all achieved with a minimum new issue concession vs. estimated fair value. It has been a privilege to work with the NDB team on this transaction, beginning all the way back in July with virtual marketing, and this outcome is a testament to all the work and dedication by the team."

Philip Brown, Head of Public Sector Debt Origination at Citi  said: "This was a terrific second Dollar Benchmark for the NDB, who is seeing the benefit of their considerable and continuous program of investor relations. Building on the successful debut 3-year benchmark in June, we've now gone longer, larger and tighter. Congratulations to the NDB Treasury team, it's been our privilege to travel on this exciting journey with them as NDB builds out its capital markets presence so successfully."

Maud Le Moine,  Head of SSA DCM at Goldman Sachs International at Goldman Sachs International said: "NDB's second COVID-response USD benchmark comes at a critical time when the COVID-19 pandemic continues to affect many countries globally. Building on the success and performance of their debut USD issuance before the summer, today's USD transaction extends the NDB curve with a new $2bn 5yr, priced 1bp inside of their inaugural issue. The deal achieved an orderbook of $2.4bn and 66% participation from official institutions, a testament to NDB's continuous marketing effort globally. It has been an honour to be a part of NDB's story this year and we congratulate the team on another incredible milestone."

Annemarie Ganatra, Managing Director, Capital Markets at Standard Chartered Bank  said: "Standard Chartered is honoured to support New Development Bank's highly successful second USD benchmark bond issuance.   The 5yr issue, NDB's largest to date, achieved a flat yield and spread to the outstanding 3yr USD benchmark, and attracted a diverse and high-quality order book; a testament to the borrower's strong profile in the international SSA markets."

Bond Summary Terms

Issuer

New Development Bank (NDB)

Issuer rating

AA+ (S&P) / AA+ (Fitch) / AAA (JCR) / AAA (ACRA)

Format

Reg S, Registered form

Size

USD 2,000,000,000

Settlement date

29 September, 2020

Maturity date

29 September, 2025

Issue price

99.651%

Issue yield

0.695%

Coupon

0.625%, Fixed, Annual 30/360

Denomination

USD 200k+1k

Listing

Euronext Dublin Regulated Market – Irish Stock Exchange

Lead managers

Bank of China, Barclays, Citi, Goldman Sachs International, Standard Chartered Bank

Co-managers

China Construction Bank, Industrial and Commercial Bank of China Limited, HSBC, Nomura, TD Securities, Royal Bank of Canada

Background information

In December 2019, the NDB registered its inaugural USD 50 billion Euro Medium Term Note Programme in the international capital markets. The Programme has been rated 'AA+' by Fitch and has been assigned 'AA+' long-term and 'A-1+' short-term issue ratings by S&P. The Base Prospectus, each supplement thereto and any Final Terms published in relation to any series of Notes is or will be available for viewing at here.

The NDB established Emergency Assistance Facility to meet the emergency needs of its member countries. Emergency loans to the member countries could be used to finance direct expenses related to the fight against the COVID-19 outbreak or provide support to governmental measures contributing to economic recovery. The NDB targets to provide up to USD 10 billion in crisis-related assistance. As at September 22, 2020, the Bank has provided RMB 7 billion Emergency Assistant Program Loan to the Government of China, USD 1 billion Emergency Assistance Program Loan to the Government of India, USD 1 billion Emergency Assistance Program Loan to the Government of the republic of South Africa and USD 1 billion Emergency Assistance Program Loan to the Government of Federative Republic Brazil.

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. The NDB received 'AA+' long-term issuer credit ratings from S&P and Fitch and 'AAA' foreign currency long-term issuer rating from Japan Credit Rating Agency (JCR) and Analytical Credit Rating Agency (ACRA).

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