The Development Bank of Mongolia to Pay Off the Samurai Bond

ULAANBAATAR, Mongolia, May 19, 2022 /PRNewswire/ -- Regardless of the ongoing speculation about The Development Bank of Mongolia's ('DBM') performance and allocation of funds, the bank says it is set to pay off the outstanding bond payments of the JPY 30 Billion Samurai Bond before its maturity date. The Samurai Bonds are guaranteed by the Japan Bank for International Cooperation (JBIC) and the Government of Mongolia.

The DBM was formed in 2011 by the Government of Mongolia to fill the gap created by the domestic, and commercial banking sector which is unable to finance large-scale development projects for economic expansion through providing access to long-term and low interest loans, thereby providing cost-effective financing. In 2013, the bank issued Mongolia's first-ever Samurai bond to invest in infrastructure projects and to offset a weakening economic cycle. It mandated 60% of its loans to finance large-scale industrial projects to facilitate Mongolia's overall development.

In recent years, there were many speculations from the media regarding DBM, ranging from unqualified loan applications to non-performing loans. The situation is not unique to DBM, as the recent years saw financial institutions around the globe facing challenges in loans to small to middle-sized enterprises and large-scale projects, especially during the pandemic.

At the time of the bank's formation, the economy of Mongolia was in deficit, with the foreign trade deficit of $1.4 billion and foreign investment falling by 47 percent. DBM's main focus was to restore the economy through the development of local businesses and mega-projects. Over the past five years, the trade turnover for Mongolia averaged $13.2 billion. The foreign trade turnover has been positive since 2014, even during the pandemic. While the trade balance was negative $2 million in 2013 it increased to $9.25 billion in 2021.

Businesses are seeing a post-covid recovery period and DBM aims to utilize this to pay off the Samurai bond before maturity, allocating funds equal to 30 percent of the bond ready to be paid and have ample time to allocate more before the maturity date of December, 2023. Despite the global pandemic, DBM is set to pay off the Samurai Bond which in turn will attract more foreign direct investment to the country.

Company: Development Bank of Mongolia

Name: Nari N White

Title: Media lead

Email: [email protected]

Phone: +976-70007222

SOURCE Development Bank of Mongolia