TOP NEWS THIS WEEK
DBM issues additional $250 million in global debt markets
US Government yields reach year-to-date high
Donald Trump raises additional tariff on 60 countries
INSIDE MONGOLIA’S BOND MARKET
DBM successfully issues additional $250 million
The Development Bank of Mongolia successfully increased the size of its US$500 million 6.90% coupon bond maturing in 2031 by an additional US$250 million through a tap issuance in June this year, bringing the total outstanding amount to US$750 million.
This transaction not only marks the second-largest international bond issuance in Mongolia's history but also stands as the largest bond transaction in Asia's frontier markets in 2026.
Category | Details |
|---|---|
Currency | U.S. Dollar (USD) |
Coupon | 6.900% (Fixed, semi-annual) |
Maturity Date | July 2, 2031 |
Issue Price / Yield | 98.759 / 7.200% |
Credit Ratings (Moody's / S&P / Composite) | B1 / BB- / B+ |
First Coupon Payment Date | January 2, 2027 |
Total Issue Size | US$750,000,000 |
Joint Lead Managers (Underwriters) | HSBC, ING, JPMorgan |
US, Japanese bond yields rise sharply
Developed markets long-term government bond yields continues rising amid prolonged conflict between the United States and Iran. Additionally, there are growing expectations among analysts that the Federal Reserve may raise interest rates as soon as September. Yields on U.S. Treasury securities have climbed to their highest levels of the year, approaching levels last seen in 2007.
What this means for Mongolian bonds and issuers?
Тикер | Хугацаа | G-Spread (bp) | Z-Spread (bp) | OAS (bp) |
|---|---|---|---|---|
MONGOL 8.65 01/19/28 | 2028-01-19 | 129.6 | 131.3 | 131.0 |
MONGOL 3½ 07/07/27 | 2027-07-07 | 183.2 | 179.5 | 179.5 |
MONGOL 7⅞ 06/05/29 | 2029-06-05 | 141.4 | 160.3 | 160.1 |
MONGOL 6⅝ 02/25/30 | 2030-02-25 | 148.6 | 170.9 | 170.6 |
MONGOL 5.95 03/09/32 | 2032-03-09 | 162.7 | 193.8 | 193.7 |
MONGOL 4.45 07/07/31 | 2031-07-07 | 174.3 | 202.2 | 202.1 |
The sharp rise in yields on low-risk U.S. Treasury securities could directly increase Mongolia's cost of raising funds in the international capital markets. This is because the yield on any U.S. dollar-denominated Mongolian sovereign bond is determined by adding Mongolia's credit spread—which reflects the country's credit risk—to the yield on comparable U.S. Treasury securities. As a result, with the yield on the 30-year U.S. Treasury reaching 5.18%, Mongolia's borrowing costs in the international bond market are likely to increase, even if the country's credit risk remains unchanged.
FOR GOVERNMENT AND CORPORATE BOND INVESTORS
Comparison between Sovereign and Corporate bonds
Metric | Sovereign Bonds | Corporate Bonds | Difference |
|---|---|---|---|
Year-to-Date Average Yield | 6.20% | 8.65% | +245 bps |
Average OAS (Option-Adjusted Spread) | 197 bps | 434 bps | +237 bps |
Average Yield (July) | 5.64% – 7.18% | 6.71% – 10.22% | — |
The average yield on bonds issued by Mongolian corporate and enterprise issuers stands at 8.65%, which is 245 basis points (2.45 percentage points) higher than the average yield on Mongolian sovereign bonds. This spread reflects the additional credit risk investors require when holding corporate debt relative to government securities.
CLOSING PRICE & YIELD
Mongolian Government, Corporate Bonds
