New government bond replaces Eurobond

Oyundelger 2017-03-23 06:03

Economy

Ministry of Finance announced that Development Bank-owned Eurobond is to be replaced by a new bond issued by the Government of Mongolia in February, 2017.

New government bond replaces Eurobond. Due to the Development Bank of Mongolia’s USD 580 million Euro bond maturing on March 21, the Ministry of Finance announced that Development Bank-owned Eurobond is to be replaced by a new bond issued by the Government of Mongolia in February, 2017. Owing to the staff-level agreement with the International Monetary Fund on three-year Extended Fund Facility program, the Government of Mongolia earned the investor’s trust in the newly offered bond. In addition, 82.07 percent of the investors have agreed to the exchange offer. Thus, the Government of Mongolia launched the new bond costing USD 600 million with 7.625 percent interest rate in the first week of March. Reports indicate that the new bond will make interest payments every six months, which is approximately USD 26 million. Although Khuraldai bond is simply replacing “Euro bond” with slightly higher interest rate, the new rate is reasonable compared to the previous government issued bond with an interest rate of 10.825 percent. A total of 76 percent of the bond was bought by American investors while 18 percent by European investors and 6 percent by Asian investors. This could also increase foreign investments, expand the drawing power and attract investors in both public and private sectors.