Ulaanbaatar, December 14, 2023 /MONTSAME/. During its regular session of Cabinet on December 13, 2023, Minister of Finance of Mongolia B. Javkhlan announced the successful implementation of debt management measures to refinance parts of the Khuraldai and Nomad sovereign bonds’ repayment in 2024 and 2026 respectively, through new government bonds on the international finance market. 

The Mongolian Government's debt management strategy for 2019-2022 and 2023-2025 aims to reduce the pressure of the Government's external debt on budget in the long term, lengthen the maturity profile of the debt portfolio, and decrease the overall balance by paying the bond debt from the state budget. Under the "Century" I, II, and III projects, successful debt management measures have addressed the remaining payments of USD 2.2 billion in securities maturing between 2022 and 2024, in compliance with the Strategy. 

In 2021, Mongolia implemented debt management measures under the "Century I" project, securing the lowest interest rate for the time being. In January 2023, the "Century II" project saw Mongolia pioneer debt management on measures in previously closed markets for developing countries, significantly reducing the risk of default. However, this time, debt management measures to refinance the remaining USD 392.5 million of overdue "Khuraldai" bond were successfully implemented on October 20-28, 2023, as part of the "Century III" project. A portion of the remaining USD 392.5 million "Khuraldai" bonds maturing in March 2024 was repurchased through the issuance of USD 350.0 million "Century III" bonds on November 28, 2023. 

These new bonds carry an interest rate of 7.875 percent and have a term of 5.5 years. Therefore, Mongolia will not pay the bond debt in 2024 and 2025. 

The total orders from international investors for the newly traded "Century III" bonds reached USD 4.8 billion, marking the highest order in history or 13.7 times higher.

Furthermore, the Government of Mongolia's risk level for the "Century III" bond interest rate is currently at its historical low, standing at 2.3 percent. This rate is half of the average risk level of 5.5 percent associated with bonds previously issued and traded by the Government. If the US Federal Reserve System's policy rate was 0-1 percent at this time, it means that the Government of Mongolia would have been able to issue bonds with an interest rate of 2.3-3.3 percent. 

Minister of Finance said that by successfully refinancing high-interest external loans with approaching deadlines, the Government's debt management measures would not only ease the strain on government finances and external trade, but also contribute to a stable foreign exchange rate, financial and economic stability, and potentially even further improve Mongolia's credit rating.