Audio By Carbonatix
The New Development Bank (NDB), set up by the BRICS group of major emerging economies, wants loans to the private sector to eventually take up a 30 percent share of its project portfolio, a senior executive at the bank said on Tuesday.
Zhu Xian, the NDB’s chief operating officer, told Reuters that the bank was 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.
“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.
The NDB is seen as the first major achievement of the BRICS - Brazil, Russia, India, China and South Africa - since they joined forces in 2009 to press for a bigger say in the global financial order created by Western powers after World War Two.
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