BRICS bank sells rand-denominated bonds for first time

The increased focus on local currency lending comes at a time when BRICS countries are exploring ways to reduce their dependence on the US-dominated financial system.

August 22nd, 2023 / By Harry Clynch

The Shanghai-based New Development Bank (NDB), which was formed by BRICS countries in 2014, has conducted its first sale of bonds denominated in South African rand as emerging markets seek greater access to local currency funding.

Last week, the NDB issued both a R1bn ($53.1m) five-year bond and a R500m three-year note, with Reuters reporting the auction attracted R2.67bn of bids. Dilma Rousseff, the former president of Brazil who now chairs the NDB, has said the development bank expects to lend up to $10bn this year to member countries – with about 30% of funds lent in local currencies.

The increased focus on local currency lending comes at a time when BRICS countries are exploring ways to reduce their dependence on the US dollar and the US-dominated financial system more broadly. According to the deputy president of South Africa, Paul Mashatile, this will be a key topic of discussion at the BRICS Summit, which starts today in Johannesburg.

Significant development

Kumeshen Naidoo, head of debt capital markets at Absa Group in Johannesburg, tells African Business that the NDB’s rand bond offerings are a significant development because they could help lessen South Africa’s dependence on international capital markets, which are often seen as particularly volatile.