Mineral-rich Mongolia plans to issue first sovereign bonds

By Leslie Hook in Ulan Bator

Published: May 11 2011 18:58 | Last updated: May 11 2011 18:58

Mongolia plans to issue its first sovereign bonds this month, marking a milestone for capital markets in this resource-rich democracy.

The newly created Development Bank of Mongolia will issue $700m in sovereign bonds to fund lending programmes, Chuluundorj Khashchuluun, chairman of the national development and innovation committee, has told the Financial Times.

Mr Khashchuluun said the issuance would take place in tranches beginning this month, with the first slice likely to be $100m. The bond will be in tugrik, the Mongolian currency, which has appreciated by 1.6 per cent against the dollar since January.

The Development Bank of Mongolia is set to be inaugurated on Thursday and has a mandate to do policy loans in areas that include infrastructure, industry, energy and roads.

“With the launch of the Development Bank we hope the investment system will be modernised,” said Mr Khashchuluun. “Policy loans have not been done for a long time in Mongolia and commercial banks cannot support these needs.”

Mongolia houses some of the world’s largest untapped mineral deposits and investment in the mining sector has soared in the past two years along with global commodities prices.

Government revenues from the mining sector are set to jump next year as the Oyu Tolgoi copper and gold mine comes online, and politicians in Ulan Bator are looking for ways to manage the coming influx into state coffers.

The Development Bank is being set up with training from the Korean Development Bank and the Development Bank of Japan. Two bankers in Ulan Bator voiced scepticism about the timing of the issuance, which has been under discussion for several months.

“It’s great for putting Mongolia on the map in terms of developing the capital markets here,” said Eric Zurrin of Rescap, a corporate finance advisory firm. “However, I struggle to see how it will happen so soon.”

He added that yields on the bonds could be quite low, perhaps 6-8 per cent.

The Development Bank may be the first Mongolian entity to issue bonds with sovereign guarantees, but it is not the only one. Politicians in Ulan Bator have talked about issuing bonds to support a variety of industries, including for a cashmere subsidy fund.

Mongolian sovereign debt has a B1 non-investment grade rating from Moody’s, the credit rating agency. “Mongolia’s rating has been constrained by susceptibility to destabilising boom-bust cycles,” noted Moody’s in its annual report on the country.

Source:Financial Times, newspaper



Post a Comment

Facebook page

Powered by Blogger.


Advertising in Mongolia An Culture Editorial of the Mongolianviews education Environmental protection Famous Mongolians Foreigners in Mongolia Inner Mongolia Ivanhoe Mines Mongolia agriculture Mongolia analysis Mongolia and Australia Mongolia and Belorussia Mongolia and Cambodia Mongolia and Canada Mongolia and central Asia Mongolia and China Mongolia and Cuba Mongolia and EU Mongolia and Germany Mongolia and Hongkong Mongolia and Hungary Mongolia and India Mongolia and Inner Mongolia Mongolia and Iran Mongolia and Israel Mongolia and Italy Mongolia and Japan Mongolia and Kazakhstan Mongolia and Korea Mongolia and Kuwait Mongolia and Kyrgyzstan Mongolia and Malaysia Mongolia and Nato Mongolia and North Korean Mongolia and Poland Mongolia and Russia Mongolia and Singapore Mongolia and South Korea Mongolia and Taiwan Mongolia and the world Mongolia and Tibet Mongolia and Turkey Mongolia and UK Mongolia and Ukraine Mongolia and UN Mongolia and US Mongolia and USA Mongolia and Vietnam Mongolia Banking Mongolia civic society Mongolia crime Mongolia diplomacy Mongolia Economy Mongolia Education Mongolia Energy Mongolia Finance Mongolia Health Mongolia History Mongolia holiday Mongolia in international media Mongolia Industries Mongolia Joke Mongolia law Mongolia LGBT Mongolia medical Mongolia military Mongolia Mining Mongolia Mining Developments Mongolia Mortgage Mongolia natural disaster Mongolia Petroleum Mongolia public announcements Mongolia railways Mongolia Religion Mongolia society Mongolia Sports Mongolia Stamp Mongolia telecommunication Mongolia tourism Mongolia Urbanization Mongolia Wild Life Mongolian Agriculture Mongolian Archeology Mongolian Food Mongolian Gay Mongolian Government news Mongolian History Mongolian Military Mongolian Mining Development Mongolian Movie Mongolian News Mongolian Parliament Mongolian Political news Mongolian Press Mongolian Songs Mongolian Women Mongolian Youth Mongolians abroad Moninfo Opinion Oyu Tolgoi Investment Agreement Photo news Press Release Rio Tinto Tavan Tolgoi coal mine Ulaanbaatar development Weird expatriates in Mongolia

Blog Archive