Mongolian Development Bank Announces Advance Payment Before Maturity of 30 Billion Yen Samurai Bond
ULAANBAATAR, Mongolia, May 13, 2022 (GLOBE NEWSWIRE) — Mongolian Prime Minister Oyunerdene Luvsannamsrai has instructed the Development Bank of Mongolia (DBM) to explore potential options, including an advance payment, to settle his Samurai obligations Leap in progress. As a result, the Bank says it will be able to better manage its future obligations and improve its overall debt profile. This move will reduce Mongolia’s general government debt, as the sovereign guarantee on the bond will simultaneously mature.
According to Mr. Manduul Nyamdeleg, CEO of DBM, the Bank is awaiting potential options to make an early payment on its first-ever 30 billion yen (US$231 million) Samurai bond before its December 2023 maturity date. DBM is the only policy-oriented financial institution in the country with a mandate to finance large-scale and strategically important development projects in Mongolia. DBM plays a unique role in the local economy by filling the void created by the emerging national banking sector, which remains unable to finance major development projects. Since its inception in 2011, the Bank has financed energy, transport, affordable housing, agriculture, processing plants and mining projects in the country.
Due to its political nature and government support, DBM has maintained a strong funding base with a longer tenure and lower cost than commercial banks in Mongolia.
In 2013, the Bank issued the first-ever Mongolian Samurai bond for JPY 30 billion with a 10-year maturity and a coupon rate of 1.52%. The guarantee from the Government of Mongolia and the Japan Bank for International Cooperation (JBIC) secured long-term financing with a lower interest rate at the time. Proceeds from the bond were used to fund affordable housing, processing plants and agricultural projects in Mongolia.
Founded in 2011, the Mongolian Development Bank is 100% owned by the Mongolian government. Its main objectives are to ensure sustainable economic growth in Mongolia, foster export-oriented value-added production, and introduce financial solutions designed to implement government development policies. As of May 10, 2022, total assets stood at 4,196,004.38 million MNT ($1,351 million). Total loans and advances amount to MNT 2,592,042 million (US$834.7 million), with the loan portfolio focusing on key sectors such as mining, agriculture and energy. Although the Bank was only established 11 years ago, it has successfully issued a number of notes in the international capital markets.
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