New Development Bank issues bond to counter coronavirus
The New Development Bank, founded by the five BRICS countries in 2014, issued a three-year bond on Thursday to help China deal with the coronavirus epidemic. The bond raised 5 billion yuan, making it the largest-ever RMB-denominated bond issue.
Funds raised will be used to finance the bank's 7-billion-yuan emergency loan to China which was approved in March. The program will focus on three provinces which were hit the hardest by the epidemic in the country. Hubei, Guangdong and Henan will receive 3.5 billion, 2.1 billion and 1.4 billion RMB respectively. It will finance urgent and unexpected public health expenditures.
The loan will support these three provinces in fighting the spread of the virus, reducing the loss of human lives, improving the resilience of the public health sector, particularly strengthening their health emergency response systems, as well as reducing the adverse impacts of the outbreak on their local economies.
The scope of financing of the program includes outbreak-related public health expenditures, including already incurred public health expenditures since the outbreak till date, and the expected public health expenditures for onward transmission containment, up to the end of 2020
"NDB is fully committed to supporting our member countries during this period of crisis to fight the spread of COVID-19 and stand ready to provide the necessary financing to this objective," Leslie Maasdorp, vice president and CFO of NDB, said.
The bond was three-times oversubscribed, with a final order book in excess of 15 billion yuan. Forty-one percent of funds were raised from the Chinese mainland; 45 percent from Europe, the Middle East and Africa; and the remaining 14 percent from Asia-Pacific, excluding the Chinese mainland.
"The funding from NDB will specifically provide much-needed emergency support during this period of crisis in our member countries, who are all facing new economic challenges and human hardship," Maasdorp said.
The bank is headquartered in Shanghai. It was established by Brazil, Russia, India, China and South Africa to fund infrastructure and sustainable development projects in developing countries. It received AA+ long-term issuer credit ratings from S&P and Fitch in 2018.