The UB Post

580 million USD Euro bond repayment has been made


The five-year loan agreement made with Developmen­t Bank of Mongolia for its 580 million USD Euro bond, which was due to expire on March 21, 2017, has been repaid.

The repayment for the Euro bond agreement made by Developmen­t Bank in 2012, was made a day before its March 21 deadline.

From the 580 million USD Euro bond, 475.9 million USD in bond notes were exchanged for the seven-year term Khuraldai bond. The exchange enabled the government to repay 82 percent of the Euro bond debt.

The government says Developmen­t Bank’s remaining 104 million USD debt and the 2.99 million USD interest fee will be paid next month using Khuraldai bond financing.

The Khuraldai bond is being sold on the secondary market with prices steadily rising from 108 USD.

Developmen­t Bank still faces the challenge of repaying its 30 billion JPY Samurai bond debt. The Samurai bond's 10-year agreement was made with Japan Bank for Internatio­nal Cooperatio­n, with an interest rate of 1.52 percent. The Chinggis bond is also due for repayment. The Chinggis bond is a five-year agreement for 500 million USD set to expire on January 5, 2018. Analysts say that in order to repay the Chinggis bond, it is necessary for the Government of Mongolia to enroll in the Internatio­nal Monetary Fund’s (IMF) extended fund facility program and begin to stock up on currency reserves as soon as possible.

It is believed that the successful introducti­on of the Khuraldai bond will assist in the IMF's approval of extended fund facility enrollment and help strengthen Mongolia’s budget and financial position. However, this program’s start date and budget amendments keep facing delays.

Some analysts say that even though the IMF has been patient with the government's delays, the fact that Mongolia is beginning to pursue enrollment in the IMF’s program after settling Developmen­t Bank's Euro bond debt might be seen as taking advantage of the IMF’s goodwill and could make the investment in the program a future risk for the IMF.

It is believed that when Parliament’s spring session starts, the budget will be the first issue discussed.

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