The Development Bank (DB) has announced that it will issue USD 600 million in bonds on the Singapore Stock Exchange in 2012. The bonds will be issued with the assistance of global financial giants ING, Deutsche Bank, and HSBC. Prime Minister S.Batbold and Finance Minister S.Bayartsogt attended a signing ceremony for the agreement in the Government House on December 2.

The bonds will be the first sold on the international market with the backing of the Mongolian government. Officials say the terms will be good, despite uncertainty in the international financial markets. The DB says the bonds will finance programs and projects that promote development and economic growth, produce value-added products, and reduce Mongolia’s dependence on imports. Specifically, the bonds will finance railroad projects, the Sainshand industrial complex, road construction projects, and energy projects.

DB Vice Director L.Bolormaa told our correspondent that there are some advantages to issuing the bonds because it introduces Mongolia to the international bond market. She said it will also open the door for Mongolia’s private sector and commercial banks to the international market.

L.Bolormaa said the DB has MNT 16.7 billion in capital but that is not enough to finance big projects, which is why the bank requested additional capital from the Finance Ministry. The 2012 budget will allocate MNT 33 billion to the bank. The DB also is working on a loan program, and USD 400 million will be raised in 2012 through that program, the bank believes. The first agreement with China’s development bank will be signed next month.