The New Development Bank (NDB) on March 24 priced a new five billion yuan (US$766.87 million) Sustainable Development Goals (SDGs) Panda bond in the China interbank bond market (CIBM). The offering was issued under the UNDP SDG Impact Standards for Bonds (UNDP SDG Standard) as well as the SDG Finance Taxonomy (China) – becoming the first issuer to do so in the debt capital market.
The three-year bond was priced at the tighter end of the price guidance at a yield of 3.22%. The proceeds will be fully utilized to finance a seven billion yuan emergency programme loan to China for supporting the country's economic recovery from Covid-19. This programme is aligned primarily with SDG 8 – promote sustaiined, inclusive and sustainable eocnomic growth.
In being the pilot issuer under the UNDP SDG Bond Standards under the UNDP China SDG Finance Taxonomy, NDB vice-president and CFO Leslie Maasdorp notes the bank's strong focus on sustainability and development impact in line with the SDGs.
He says: "In this regard, we map each project to a primary SDG and additional SDGs. Our strategic objective is to mobilize funds for those projects that generate positive economic, social and environmental benefits for society, as well as bridge the financing gap to achieve the SDGs."
UNDP resident representative in China Beate Trankmann adds: "It is encouraging to see the positive reaction by investors to this SDG bond issued by NDB, which marks the first instance globally of a multilateral development bank putting UNDP's SDG Finance Standards to the test."
The offering was 2x oversubscribed with mainland China investors accounting for 51% of the bonds and offshore investors 49% (Asia-Pacific, excluding China 27.5%, EMEA 15% and Americas 6.5%). The bonds are issued under NDB’s 20 billion yuan bond programme in CIBM.
Commenting on the transaction, Deutsche Bank’s head of ESG for Asia-Pacific Kamran Khan says NDB’s SDG Panda bond demonstrates that multilateral development banks have an important role to play in setting the standards for capital market instruments supporting sustainability and achievement of SDGs, particularly in emerging markets. “The capital raised and benchmarks established by this bond will have a very material impact on the standards under which public and private entities raise capital to support the achievement of SDGs in NDB’s member countries,” he adds.
Bank of China was the lead underwriter and bookrunner of the transaction, while Industrial and Commercial Bank of China, Agricultural Bank of China, Bank of Communications, Deutsche Bank (China), DBS (China) and CITIC Securities acted as joint lead underwriters
The NDB is a multilateral development bank established in 2015 by Brazil, Russia, India, China and South Africa (BRICS) with the objective of financing infrastructure and sustainable development projects in BRICS and other emerging and developing countries.