THE New Development Bank (NDB) on June 16 priced its first Covid-19 response bond amounting to US$1.5 billion to finance sustainable development activities in its member-countries, including emergency assistance loans. Such emergency loans could be used to fund direct expenses related to the fight against the Covid-19 pandemic or to provide support to government measures contributing to the economic recovery of NDB members.
The three-year offering was priced at 99.896% with a coupon of 0.625% to offer a yield of 0.660%. The final coupon was 7bp tighter than the upper bound of initial price thought on the back of robust investor demand.
The transaction met strong support from high quality investors, with participation from central banks and official institutions, which accounted for 75% of the bond allocation. In terms of geographic distribution, 56% of the bonds were sold in Asia, 29% in EMEA and 15% in the Americas.
NDB vice-president and CFO Leslie Maasdorp describes the bond issue as strategically important in addressing the economic and social challenges that NDB member-countries are facing in their fight against the Covid-19 outbreak.
Citi, Credit Agricole CIB, Goldman Sachs, HSBC and J.P. Morgan acted as lead managers for the transaction, while Bank of China, Barclays, DBS, Industrial and Commercial Bank of China, Mizuho Securities, Standard Chartered and TD Securities acted as co-managers.
The bond offering follows NDB’s issuance of a five-billion-yuan (US$706 million) coronavirus combating bond in the China interbank bond market on April 2 this year. The three-year deal was launched to support the Chinese government in the financing of public health expenditure in Hubei, Guangdong and Henan provinces that were hit hard by Covid-19.
The proceeds will be fully utilized to finance the seven-billion-yuan emergency assistance programme loan to China, which was approved by the NDB board. The bank says the loan will contribute in a material fashion to improving the resilience of the public health sector in the three provinces.