BRICS Bank To Deepen Footprint in Private Sector

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The New Development Bank (NDB), set up by the BRICS group of major emerging economies – Brazil, Russia, India, China and South Africa, has said it is looking at increasing its loan portfolio to the private sector to 30 percent share of its project portfolio.

According to Zhu Xian, NDB’s Chief Operating Officer, the bank is targeting an overall 70-30 split between sovereign and non-sovereign loans in its project portfolio and was seeing strong demand for private sector loans especially in Brazil, South Africa and Russia.

The Shanghai-based bank on Monday approved six new projects which brought its loan portfolio up to over $5.1 billion across 21 projects. Two of these were non-sovereign loans, which are issued to companies without a government guarantee.

“In India and China, there’s very strong demand for sovereign…But on the other hand, some other countries for different reasons they probably prefer more non-sovereign lending,” he said via Reuters.

“Some countries they still have some sort of fiscal difficulties. Secondly, the debt sustainability is a concern. They don’t want to borrow too much in sovereign terms. So they prefer you do more market transactions.”
The bank’s first non-sovereign project was a $200 million loan to Brazil’s Petrobras for an environmental protection scheme and the second a $200 million loan to South Africa’s Transnet to reconstruct a port in Durban.

Zhu said that there was a gap in the market for them to fill as they were willing to make long-term loans with tenures of at least 10 years.

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