Mongolia seeks early buyback of Samurai debt www.reuters.com
SINGAPORE, May 19 (Reuters) - Mongolia wants to buy back a yen-denominated bond early to manage forthcoming foreign debts and take advantage of a weak Japanese yen, Finance Minister Javkhalan Bold said on Thursday.
The 30-billion yen ($234 million) bond, issued by the Development Bank of Mongolia, matures on Dec. 25, 2023. Javkhlan said the bank had told the bond’s arrangers it was ready to buy back the debt now.
“Starting today and until the maturity of the bonds we will be always ready. Whoever wants to sell their bonds back to us, we will be ready to buy back,” he told Reuters in a video call from his parliamentary office in the capital, Ulaanbaatar.
Repayments will be funded by collecting bad debts owed to the Development Bank, owned by the government, a process already underway and expected to deliver at least 500 billion Mongolian tugrik ($160 million) by year’s end, he said.
Early repayment was also intended to show investors that the country had enough foreign cash to meet debts, Javkhlan said, as well as manage the flow of hard currency out of the economy at a delicate time, with large debts due late in 2023.
“The Japanese yen has depreciated quite substantially,” he added. “Building on this momentum we would like to seize an opportunity to repurchase Samurai bonds early,” he said, using the name for yen debts issued by foreign companies in Japan.
The yen is down about 10% on the U.S. dollar this year. Mongolia’s commodity-driven economy, meanwhile, is growing.
But border closures with China and sanctions on Russian banks used to process export receipts are hampering its ability to cash in on rising commodity prices, just as food import costs have surged and squeezed limited currency reserves.
Fitch Ratings reaffirmed a Mongolian sovereign rating of B on Wednesday but noted that reserves of $3.6 billion, against debts of over $1 billion due in 2023-24, presented a vulnerability.
Javkhlan said Mongolia had informed the bond’s arrangers, Nomura Securities and Daiwa Securities, about plans for early repayment two weeks ago but had not heard back.
Nomura declined to comment and Daiwa did not immediately respond to a request for comment. The bond’s arranger, Mizuho Bank, declined to comment, as did the Japan Bank for International Cooperation, which guarantees the bonds.
$1 = 3,100 togrog Reporting by Tom Westbrook; Editing by Bradley Perrett