The New Development Bank (NDB) in South Africa has just taken a significant step.
The BRICS countries no longer hide their ambitions to play a leading role in global geopolitics. They had announced their program to launch a coin that will be common to them. The idea has been in the air for some time.
The New Development Bank (NDB) carried out, on Tuesday, August 15, a bond issue in the South African bond market. The operation is historic and takes place in a context of de-dollarization. In fact, it is the first time that the community banking institution founded in 2015 has carried out a transaction of this type.
The NDB’s Unprecedented Operation in the South African Bond Market
The operation is all the more exceptional since, since its start-up, the NDB is the best qualified institution to issue in this market. An issue received favorably by investors.
They have submitted more than $2.5 billion in purchase proposals for periods spanning 3 and 5 years. That is, several institutions have shown their willingness to invest money to buy these titles.
This enthusiasm is indicative of the attractiveness of these bonds to investors. You should know that 94% of the purchase offers made by investors on these titles were at the recommended price. Some were even below.
“The order book was well supported, with more than 2,500 million euros in offers for the 3 and 5-year tranches. […] The order book was well diversified, with 71% of the offers assigned to institutional investors and the rest absorbed by local banks”, explained the NDB in its press release.
This rather positive situation indicates the high level of investor confidence and interest. Above all, there is a strong agreement between the NDB and the latter. The prices offered by the issuer and those that investors are willing to pay are very close to each other.
Given this positive reception, the NDB is considering the option of increasing the size of the operation. Thus, the institution could increase the amount of the latter from 1 to 1.5 billion dollars. A potential new transactional success that would absolutely confirm the financial agility of the institution.
A Transaction with Multidimensional Effects?
The NDB’s foray into the local currency bond market is not an irrelevant fact a priori. It attests, on the one hand, to the dedication of the community bank to the promotion of local financial ecosystems.
This fact echoes recent revelations by Russian Diplomat Roman Babouchkine. During a recent speech, the latter mentioned the abandonment by the BRICS countries of their idea of a common currency. This, in favor of a new strategy consisting of relying on the local currencies of the countries of the organization to carry out cross-border transactions.
On the other hand, the resounding success of this first BND bond issue goes beyond the simple framework of financial transactions. It is the sign of a new momentum in favor of collaboration between the BRICS member states.
By becoming the highest-rated issuer in the South African market since 2015, the NDB reinforces the commitment that aimed to promote the independence of the group of countries in the field of financing for development. In this context, the objective of the community bank is clear. It wants to strengthen its presence in the financial markets of the BRIC member states.
By Audy Castaneda
