According to Bloomberg, Citigroup Inc. predicts that Mongolia could sign a 500 million USD relief program agreement before the end of February, as Mongolian dollar bonds returned 1.5 percent in the past three months, the highest return among nine Asian market bonds according to JPMorgan Chase & Co. indexes.
The surging price of copper has helped the value of Mongolian bonds rise exponentially. Copper prices are up 20 percent, mainly due to speculations concerning U.S President Donald Trump’s plans to renew infrastructure.
AllianceBernstein LP and Morgan Stanley Investment Management predict the bond rally could continue if the IMF relief program is finalized. Vincent Tsui, an economist at AllianceBernstein, noted that the IMF’s standby agenda will include support from World Bank, Asian Development Bank and other international financial institutions.
The Citigroup statement, issued on January 26, note that there is a “strong likelihood” Mongolia will engage more international markets after receiving the IMF package. Analysts are optimistic about the recovery of the Mongolian economy with rising metal prices expected in 2017, but the appeal of the sovereign bonds still hinge on completion of the IMF deal and successful sales prior to the presidential election in June.
While the Ministry of Finance has given assurances that Development Bank’s 580 million USD debt will be repaid next month, investors are still waiting to see what developments emerge.