Mongolia to issue $1 bln in bonds to help ease cash shortfall

ULAN BATOR, May 29 (Reuters) - Mongolia plans to issue a $1 billion debt offering to put its fiscal affairs back in order, it said on Thursday, as it tries to ride a wave of good will that arose from a $6 billion deal with global miner Rio Tinto (Xetra: 855018 - news) for its giant Oyu Tolgoi copper mine.
According to a statement from Thursday's Cabinet meeting, a deal for the launch of the crucial expansion project at Oyu Tolgoi has given investors reason to reassess risk in the country.
"International investors are keen to buy bonds of Mongolia," the statement said.
Mongolia is hungry for cash injections after an 84 percent decline in foreign investment last year, caused by a weaker commodities market and slowing growth in China.
The country faces the maturity in 2017 of state-backed bonds from the Development Bank of Mongolia worth $580 million and sovereign bonds worth $500 million in 2018.
Mongolia could use the proceeds to relieve debt pressures and stabilize its balance of payments, the cabinet statement said. But the country will have to be careful in spending the funds to avoid breaching debt restrictions that cap debt to about 58 percent of GDP.
"It looks like they'll use the proceeds to refinance some of their mid-term debt obligations, allowing them to avoid breaching the debt ceiling," said Badral Munkhdul, the head of the market-analyst firm Cover Mongolia.
Traders speculated earlier this month that Trade and Development Bank of Mongolia left value on the table in its government-backed $500 million debt offering. Mongolia's largest commercial bank may have found more favorable conditions than the 9.375 percent yield it settled on May 19, which was above the sovereign curve, had it waited for the resolution of Oyu Tolgoi.
Andrew Fennell, an analyst at Fitch Ratings, was on the fence about the idea while the government's plans on how to use the funds remained unclear.
"If the ultimate purpose is for refinancing purposes then we would view the proposal as credit neutral," Fennel said in an email. "However, if the debt issuance is intended to finance additional public expenditure and raise public debt levels significantly beyond current levels then we would view this as credit negative."
Fitch estimates that debt was at 63 percent at the end of 2014, which includes all debts explicitly guaranteed by the Mongolian government.


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 Italy Mongolia and Japan Mongolia and Kazakhstan Mongolia and Korea Mongolia and Kuwait 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 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


Live Traffic