Please click Display Images or Download Pictures to properly view this newswire
- BREAKING NEWS -
Wednesday, March 16, 2016
Mongolia eyes $500m from syndicated loan debut
The government of Mongolia is seeking $500m from its syndicated loan debut and has already received $250m of the funds.
March 16 (GlobalCapital) At the time invitations were sent, the loan size was $200m, with an undisclosed greenshoe according to a banker who received it. Sources reveal the country is now eyeing a total amount $500m from the market.
A $250m five year portion of the total $500m was funded on March 15, they said but declined to disclose the source(s) of the funds. Although the five year tranche was closed earlier this week, lead Credit Suisse is flexible on expanding the syndicate and this part remains open to those interested.
Mongolia looking for the remaining $250m via a three year facility for which a full-fledged syndication is ongoing. The sovereign turned to the loan market after receiving the cold shoulder from bond investors for a proposed 144A/Reg S bond. Bond investors were said to have been demanding a yield of 12% minimum for the five year bond.
In contrast, the country is paying a margin of 625bp above Libor for the amortising five year tranche of its loan. The average life of this part is 4.1 years. Mongolia is offering a margin of 575bp above Libor for the three year bullet. The sovereign is raising the money through its Ministry of Finance.
While macro factors pose a challenge, analysts believe things could improve over the next few years, assuming a boost in income from exports from the Mongolian Oyu Tolgoi gold and copper mine.
A $4.4bn loan for the development of the mine was signed at the end of 2015. The deal, six years in the making, was stalled in 2013 because of a dispute between the Mongolian government and London-listed miner Rio Tinto.
"The resolution ... of the dispute over the Oyu Tolgoi mining project will unlock foreign investment and export revenues over the rating horizon," Moody's wrote in a February 1 report.
Mongolia's loan comes with an undisclosed greenshoe amount. For the three year, banks committing $50m or more earn 125bp as fees and receive the MLA title. Lead arrangers committing $24m-$39m earn 100bp in fees, and arrangers committing $5m-$29m earn 75bp.
For the five year the levels of commitment were the same but the fees started at 150bp for the MLA level, and went down to 125bp and 100bp for the next two levels. Commitments are due by April 1. Proceeds are to go towards
infrastructure developments in the country.
Suite 303, Level 3, Elite Complex
14 Chinggis Avenue, Sukhbaatar District 1
Ulaanbaatar 14251, Mongolia
P Please consider the environment before printing this e-mail.