NDB keen on masala bonds, to launch first issue this year

After IFC and ADB, the BRICS grouping-promoted New Development Bank (NDB) is also bullish on masala bonds and may hit the market with the maiden issue by December, its president K V Kamath has said.
"We will explore domestic currencies. We are working on China at present and next we will work on India," Kamath told reporters on the sidelines of an industry event late last evening.
He said the bank, which started operations last month, wants to raise a "reasonable sum" from the rupee bond issue this year itself and the size will be determined by its funding requirements.

"There are lot of challenges like how do you hedge risks, how do you negative carry till you disburse. We are working on all these," he said.
Kamath said it is necessary for a lender like NDB to fund the growth requirements of its members Brazil, Russia, India, China and South Africa. These countries account for over 60 per cent of the incremental growth annually.
World Bank Group member IFC has in the past done a slew of rupee-denominated bond issuances totalling over USD 1 billion now, while ADB has raised USD 50 million.

Shanghai headquartered-NDB, which has been set up with a capital of USD 100 billion, will like to grow its book gradually, Kamath said.

The bank recently announced its first set of loans involving financial assistance of USD 811 million for sustainable energy projects.
Terming sustainability as an "economic imperative", Kamath said NDB will also explore options of raising green bonds.
The NDB, which has been dependent on experts from
institutions in member countries and a few consultants till now, will be raising its required staff in the next eight weeks, Kamath said.
It is also seeking more partnerships like the one with ICICI Bank, and also with development institutions.
Asked about the depressed commodity prices impacting many countries in the grouping, Kamath said, "it is a global challenge and we will have to find out ways to balance it in the face of excess capacities."

On the impact from troubles in Brazil, Kamath said he does not see any major impact and the South American nation will be able to pool in the committed capital.
"Oil and commodity prices have an impact on member countries. When you set up a bank, you are doing it for the long run. You have to see two things -- capability of shareholders to bring capital which will not be a challenge and their ability to absorb. The absorption capacity will not be there for a small period of time, but it will come back," he said.
He also downplayed the NPA threats in the country, saying worries about bad debts are over-blown and that higher growth will ensure that stressed assets turn productive in the short-term.

"I do not understand what the noise is about...My belief is that most NPAs will turn productive in the short run, and not in the long-term," he said.
Comparing the Indian scenario with that of China in the early 2000s, Kamath said at USD 500 billion, non-performing assets accounted for 50 per cent of China's GDP at that time and now, have recovered to be among the largest banks in the world.
"We are (NPA numbers) not even 10 per cent of GDP. I think we should make less noise about it," he said, adding that India should not be frightened by the "clean-up" that has started.