'BRICS bank' looks to local currencies as Russia sanctions bite

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Hobbled by the impact of sanctions against founding shareholder Russia, the New Development Bank (NDB) set up by the BRICS countries needs to increase its local currency fundraising and lending, South Africa's finance minister told Reuters.

South Africa will host leaders of the other BRICS nations - Brazil, Russia, India and China - as the bloc aims to widen its influence at a Johannesburg summit later this month.

Established in 2015 as the flagship financial project of the bloc, the NDB's ambition to serve emerging economies and de-dollarise finance have been curbed by economic realities and Moscow's invasion of Ukraine. Chief Financial Officer Leslie Maasdorp told Reuters in an interview at the NDB headquarters in Shanghai that the bank aims to increase local currency lending from about 22% to 30% by 2026, but that there were limits to de-dollarisation.

A five-year $1.5 billion bond the NDB issued in April 2021 had a 1.125% coupon. Two years later, a $1.25 billion five-year bond had a 5.125% coupon. That is more expensive than other multilateral development banks with similar credit ratings, S&P Global Ratings analyst Alexander Ekbom said. Other markets have lagged behind, though the bank is hoping to raise up to 1.5 billion rand in debut bonds in South Africa on Aug. 15. It is also aiming to issue its first rupee bond in India by the end of 2023.Nevertheless, the NDB, established with $10 billion in paid-in share capital from each BRICS country, wants to expand.

 

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