- "Erdenes Tavantolgoi" JSC - the largest coal exporter of Mongolia is issuing corporate bonds in three tranches on the Mongolian Stock Exchange. D.Dayanbilguun CEO of "BDSec" JSC, a lead underwriter to the bond, talked about the bond. Highlights from the interview follows:
"Erdenes Tavantolgoi" JSC is issuing dual currency (USD and MNT) corporate bonds to the public on the Mongolian stock exchange with coupon rate of 5.8% for USD and 10% for MNT. The second tranche worth of $100 million and ₮285 billion respectively and bond subscription is organized between 16th of August and 25th of August, 2021. The bond offers many benefits to the investors, including high liquidity of being available to be traded on the secondary market before its maturity and a higher rate of return than bank deposit rates.
As the lead underwriter, our main goal is to attract foreign and domestic investors to the local capital market because the bond issuer, "Erdenes Tavantolgoi" JSC is the largest exporter in Mongolia and brings the major source of revenue in foreign currencies. The company raised USD 200 million from more than 900 investors including foreign and local citizens and entities in the first tranche of the bond. Exchange rate stability is very important in our country. However, dollar bonds do not have such a risk. The US dollar exchange rate has been relatively stable in Mongolia for 3-4 years, but foreign investors make decisions based on at least 2-5 years, not months.
The Central Bank of Mongolia approved for the first time the issuance of US dollar bonds on the local capital market. The US dollar bond was more in demand in the first tranche. Individual investors are subject to pay 5% interest income tax on publicly offered bonds listed on the MSE.
- With the bond financing, Erdenes Tavantolgoi JSC will implement major infrastructure projects, namely railways, coal loading facilities, and water supply projects. After successful implementations, the profitability is projected to increase 2-3 times. Therefore, every investor who purchases Erdenes Tavantolgoi bond makes a great contribution to national development.
Our company is investing on our digital solutions to get closer to our foreign and local clients. We have introduced our online brokerage service which enables our clients to see real-time and historical stock prices.
Source: Local Newspaper “Daily Newspaper”