Chairman of the Development Bank Ch. Khashchuluun has told
Bloomberg that it aims to sell USD700 million of domestic-currency bonds in
2011, with sales scheduled to begin this month. Investors will be offered
tugrik-denominated bonds due in five, 10, and 15 years in several sales from
the end of this month to around September. The bonds will be backed by the
government, which has approved the sales, he said, adding, ““In a week or two
we will have another meeting with investors to make more concrete plans. to set
terms for the initial sale.  The Mongol
Bank and the Finance Ministry are involved in “extensive consultations” on the
sales.

The first sovereign offerings will be via the stock exchange
and the Mongol Bank, with a private placement also possible, Khashchuluun said.
The size of the offering may be adjusted to reflect market demand and also
bring in a wide range of investors with the number of sales not yet decided, he
said. Domestic banks and international investors have shown interest in the
debt and yields are being discussed, Khashchuluun said.

Moody’s Investors Service rates Mongolian sovereign debt B1,
four levels below investment grade, while Standard & Poor’s rates the North
Asian nation BB-, three levels below investment grade. The tugrik has
strengthened 18.2 percent against the dollar since the beginning of last year.

The government has tasked the Development Bank of Mongolia,
which opened on Thursday, to help finance rail, road and other infrastructure
projects as well as the building of an industrial park. The bank is in a hurry
to start the sales so that it can access funding before construction stops due
to freezing temperatures in the winter months, Khashchuluun said. Lack of infrastructure
is holding back economic development across the economy, he said.