By Mary-Katherine Stinson
Lexington, Ky., Dec. 1 – The government of Mongolia issued $350 million of 7 7/8% bonds due 2029 at a record-low spread of 260 basis points above Treasuries, according to a press release.
The new bond issue reduced annual interest costs by more than $3 million and funded Mongolia’s international bond obligations until the next maturity in April 2026.
During an extensive international roadshow, the delegation of the Ministry of Finance and Bank of Mongolia spoke with over 100 global investors from Singapore, Hong Kong, the Middle East, London, continental Europe and the United States. The meetings were used to communicate key infrastructure project developments related to Vision 2050, Mongolia’s path towards a diversified and sustainable economy.
Investors responded strongly with the order book reaching $4.2 billion at the peak and 293 investors participating. The 12x oversubscription of the orderbook allowed for a pricing flat to secondary market yields of Mongolia without any new issue premium.
The transaction set new records for Mongolia in terms of its 13.7x oversubscription and a record low spread.
The deal was part of a debt management exercise which priced on Nov. 28, funding a tender and the redemption of the $392,563,000 8¾% bonds due March 2024 (Cusips: Y6142NAA6, 60937LAA3). The objectives of the transaction were to address near-term maturities, extend the duration of the nation’s debt stock, reduce cost and further Mongolia’s presence in the international debt capital markets.
The tender offer was conditioned on the completion of the new issue, as the proceeds will be used for the redemption.
| Issuer: | Mongolia
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| Amount: | $350 million
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| Issue: | Bonds
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| Maturity: | 2029
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| Coupon: | 7 7/8%
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| Spread: | Treasuries plus 260 bps
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