On November 28, Mongolia priced a debt management exercise, funding a tender and the redemption of the USD 392.6 million bonds maturity in March 2024. The objectives of the transaction were to address near-term maturities, extend the duration of the nation’s debt stock; reduce cost; further Mongolia’s presence as a savvy issuer in the international debt capital markets.
During an extensive international roadshow the delegation of the Ministry of Finance and Bank of Mongolia spoke with over 100 global investors from Singapore, Hong Kong, the Middle East, London, continental Europe and the United States. The meetings were used to communicate key infrastructure project developments to drive Mongolia’s future, policies to preserve macroeconomic and external stability, Mongolia’s debt management and the Vision 2050, Mongolia’s path towards a diversified and sustainable economy.
The new USD 350 million 7.875 percent due 2029 bond issue and tender achieved all stated objectives, reducing annual interest costs by more than USD3 million, and funding Mongolia’s international bond obligations until the next maturity in April 2026. The new bonds met with extremely strong investor demand with the order book reaching USD 4.2 billion at the peak and 293 investors participating. The 12-times oversubscription of the orderbook allowed for a pricing flat to secondary market yields of Mongolia without any new issue premium. 22 percent of participating investors are domiciled in the United States, 32 percent in Europe and Middle East, and 46 percent in Asia.
The transaction set new records for Mongolia in terms of its 13.7 times oversubscription and a record low spread of only 260 basis points against benchmark US Fed Fund rates. This follows the record of the 2021 transaction which secured Mongolia the lowest coupon ever for a single-B rated sovereign issuer.