Government raises USD 600 million in Nomad bond to repay sovereign debts

2020-09-29 17:35:19

Ulaanbaatar /MONTSAME/. Minister of Finance of Mongolia Ch.Khurelbaatar today announced that the government of Mongolia together with the Bank of Mongolia has issued 5.5-year ‘Nomad’ sovereign bond with 5.125 percent of annual coupon rate, raising USD 600 million on international stock markets. The trades of the Nomad bond, whose repayment is due in April 2026, have been completed by September 29. 

Minister Khurelbaatar explained that the purpose of the Nomad bond is to repay the USD 500 million of the five-year Mazaalai bond, maturity of which is approaching in April 2021. With the new issuance of the Nomad bond, the government has made a debt restructuring on part of the current outstanding sovereign debts, exchanging 10.0875-percent Mazaalai bond debts with the 5.125-percent Nomad bond debts, at almost half the interest payment of the Mazaalai. 

He further said that the repayment of another sovereign guaranteed Chinggis bond (Mongolia has repaid USD 500 million of the total USD 1.5 billion debts of Chinggis bond in 2018) has been postponed or rescheduled to lessen the burden on the budget.  

“This measure now allows the government to save around USD 26.7 million in bond interest payment annually. The government of Mongolia pays around USD 203 million annually for the interest payment of its sovereign bonds, namely Mazaalai, Chinggis, Gerege and Khuraldai, and thanks to the new Nomad bond, the annual payment for the sovereign bond interests is expected to lower down to USD 176.4 million.” 

“In other numbers, government budget burden imposed by the total repayment of USD 1.5 billion sovereign debts Mazaalai (USD 500 million), which was issued in April 2016, and Chinggis (USD 1 billion) bonds, issued in December 2012, due in 2021 and 2022 respectively, has now been alleviated or the repayment now has been postponed by 5.5 years” added the Minister. 

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