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By Jingjing Zhang

The S&P Global Ratings assigned its AA+ long-term and A-1+ short-term issuer credit ratings (ICR) to the New Development Bank (NDB), formerly referred to as the BRICS Development Bank, On Aug. 29.

NDB is a multilateral development bank established by the BRICS states, namely Brazil, Rassia, India, China and South Africa.

The outlook for the long-term rating is stable, according to S&P.

S&P assessed the NDB's financial profile as extremely strong, reflecting its robust capitalization and ample liquidity. In its press release, S&P stated, 'The ratings reflect our opinion that NDB will establish itself as a catalyst in reducing the infrastructure deficits faced by its BRICS members.'

"Today marks a momentous step for NDB towards establishing itself as a premier multilateral development finance institution," said K. V. Kamath, President of NDB, commenting on S&P's rating announcement.

Earlier this month, Fitch Ratings (Fitch) announced that it had assigned NDB a long-term issuer default rating (IDR) of 'AA+' with a stable outlook and a short-term IDR of 'F1+'.

"The AA+ ratings from the two agencies are a recognition of the bank's strong financial profile as well as an endorsement of its prudent future growth plans and sound risk management practices," said K.V. Kamath, "Given the scale of our future ambitions, the AA+ ratings from S&P and Fitch, put the NDB in an exceptional position to mobilize its financial resources at competitive rates thereby greatly enhancing our lending capacity to our members."

S&P stated that although NDB has a short track record and its shareholder structure presents some agency risk issues; it is expected that the institution must focus on strengthening its operational capacity and promoting robust governance and risk management practices over the next few years.

NDB is a new multilateral institution that was formed by BRICS countries with an international treaty signed in 2014. Headquartered in Shanghai, China, NDB started its operations in 2015. NDB's mandate is to mobilize resources for infrastructure and sustainable development projects in BRICS and other emerging economies and developing countries.

The founding members have backed the institution with a considerable subscribed capital base of USD 50 billion, of which USD 10 billion represents paid-in amounts to be funded in full by January 2021. Each member is contributing an equal share of 20 percent of the capital.