Mon­go­lia says bank bond­hold­ers will be re­paid in full

Kuwait Times - - BUSINESS -

De­vel­op­ment Bank of Mon­go­lia bond­hold­ers can ex­pect their debts to be re­paid in full when they fall due next year, a se­nior fi­nance of­fi­cial said yes­ter­day, even as the state-backed bonds traded be­low par just three months be­fore ma­tu­rity. The In­ter­na­tional Mon­e­tary Fund is pre­dict­ing zero growth this year for Mon­go­lia’s once promis­ing econ­omy, as a re­sult of years of de­clin­ing for­eign in­vest­ment, slower growth in China, and a softer mar­ket for its abun­dant coal re­sources.

The coun­try pinned be­tween China and Rus­sia is reel­ing from a bal­ance of pay­ments cri­sis and a tum­bling tu­grik cur­rency that the present gov­ern­ment has blamed on mis­man­age­ment by the prior ad­min­is­tra­tion. On Fri­day, Mon­go­lian fi­nance min­istry of­fi­cials held talks with groups such as the IMF and World Bank to present their plan to buoy the econ­omy. Deputy Fi­nance Min­is­ter Khurel­baatar Bul­gan­tuya told a news con­fer­ence fol­low­ing the talks that Mon­go­lia hoped to work with part­ners to re­fi­nance $580 mil­lion in sov­er­eign-backed debt from the De­vel­op­ment Bank of Mon­go­lia due in 2017.

The gov­ern­ment could lighten its bur­den on in­ter­est on loans with new “soft” loans that of­fer eas­ier terms and lower in­ter­est for re­pay­ment, she said. Rene­go­ti­at­ing its debt for a smaller re­pay­ment on the prin­ci­pal, known as a hair­cut, “would be the last re­sort,” she said. “With the IMF, we’re look­ing to re­fi­nance.” The De­vel­op­ment Bank bonds yes­ter­day were trad­ing be­low par at 97 - just months away from the re­demp­tion date in March 2017. “The cor­rec­tion was trig­gered by Pres­i­dent-elect (Don­ald) Trump’s ex­pected pro­tec­tion­ist poli­cies and fron­tier mar­ket out­flows. The coupon is low and the price fall brings the yield in line with fair value,” said a Hong Kong based credit an­a­lyst, re­quest­ing anonymity be­cause he is not au­tho­rized to speak to the me­dia. — Reuters

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