ADB opens Mongolian Togrog-linked bond market

The Asian Development Bank (ADB) has collected 21 billion Mongolian togrogs (MNTs) in a groundbreaking issue of the first offshore MNT-linked nomadic bond which is approximately equivalent to 7.5 million dollars. The issue sets a new benchmark in the international bond market for the border frontier.

The bond carries 10.1% half-yearly coupons with 5 years of maturity. Recognized in MNT but fixed in US dollars, the bond issue was written by ING Bank and sold to a European asset manager.

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Proceeds were used to fund ADB’s Gender Inclusive Dairy Value Chain project for Milco LLC in Mongolia.

“This is a milestone transaction for ADB’s local currency operations,” stated ADB Treasurer Pierre Van Peteghem. “The emerging and frontier markets have come under pressure during the pandemic, therefore the ability to raise competitively priced term funding in Mongolian togrog at this time is a major achievement with tangible benefits in terms of currency risk mitigation for ADB’s borrower.”

Currency-linked bonds are important in terms of development because they help create a yield curve where official issuance is often rare.

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