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Mongolia's Bond Risk Premium Decreases to Historic Low of 2.27 Percent www.montsame.mn
The Government of Mongolia issued a USD 500 million bond with an interest rate of 6.625 and a maturity of five years under the “Century IV” project and began trading it on the international securities market.
The initial order for the newly issued bond exceeded the trading volume by 8.2 times, reaching USD 4.1 billion. In connection with this, the bond risk premium of Mongolia has decreased to 2.27 percent, allowing the bond interest rate to be set below the secondary market interest rate.
The Government of Mongolia managed next year's repayment of the "Nomad" and "Century-II" bonds by buying them back with the trading of the "Century-IV" bond. This improves Mongolia's debt sustainability by enabling the country to pay off the remaining payments on the "Nomad" bond without burdening the budget or economy. This was a crucial step in reducing the amount of external debt and ensuring macroeconomic stability, according to the Ministry of Finance of Mongolia.
By trading the "Century-IV" bond, Mongolia managed to issue bonds with interest rates lower by 0.1-0.4 percentage points than the bonds of countries that have higher credit ratings including Uzbekistan, Brazil, and the Dominican Republic. This opens up the opportunity for domestic enterprises to attract low-cost financial resources from international financial markets.
Published Date:2025-02-21
