BRICS Bank Set to Launch Debut INR Bond, Expanding Local Currency Lending

• The New Development Bank (NDB), also known as the BRICS Bank, plans to issue its inaugural Indian rupee bond by October.
• The NDB, established by BRICS countries (Brazil, Russia, India, China, South Africa), aims to boost local currency lending and expand its presence in member countries’ capital markets.

BRICS Bank’s Debut Indian Rupee Bond and Strategy for Local Currency Lending

The New Development Bank (NDB), commonly known as the BRICS Bank, is preparing to issue its inaugural Indian rupee bond by October, as revealed by Vladimir Kazbekov, the vice president and chief operating officer of the bank. The NDB, established collaboratively by BRICS nations (Brazil, Russia, India, China, and South Africa), has a core mission of mobilizing resources for infrastructural and sustainable development endeavors in emerging markets and developing countries. In a significant expansion move in 2021, the BRICS Bank welcomed Bangladesh, Egypt, United Arab Emirates, and Uruguay as new member countries.

Navigating Currency Dynamics: A Strategic Shift

During a recent press briefing, Kazbekov unveiled the bank’s plans, stating, “We’re going to tap Indian market — rupees — maybe by October in India.” He further highlighted a strategic shift in currency financing for projects among member countries. This involves financing projects in one member country’s currency, such as using Chinese yuan (CNY) to fund projects in South Africa, instead of relying solely on the U.S. dollar (USD).

Based in Shanghai, the NDB is actively working to augment local currency lending. Currently, most of its local currency lending is in Chinese yuan, comprising about 22% of its lending portfolio. The bank aims to raise this to 30% by 2026. Dilma Rousseff, former Brazilian leader and head of the New Development Bank, recently conveyed the bank’s lending projection for this year, estimating between $8 billion to $10 billion. She emphasized the ambition to have around 30% of total lending in local currencies.

The bank’s commitment to local currency lending was further demonstrated with the successful issuance of its first ZAR bond in the South African bond market on August 15. Leslie Maasdorp, the BRICS Bank’s chief financial officer, explained that the proceeds from this bond issuance will be channeled towards funding infrastructure and sustainable development projects in South Africa. Maasdorp also highlighted the NDB’s intention to establish a more significant presence in the local capital markets of its member countries, aiming to fund its diverse portfolio of local currency loans.