While European nation reels from the threat of economic collapse brought on by its sovereign debt, Mongolia plans to tap into the global debt market. The Mongolian Development Bank announced that it would issue USD 600 million worth of Euro bonds with assistance from global financial giants such as ING, Deutsche Bank, and HSBC. The bank currently plans to sell the bonds in several stages over the Singapore Exchange (SGX) this December and into 2012.

Mongolia first planned to issue sovereign bonds to combat the 2008 financial crisis. However, since then expectations have dwindled and bonds never reach the global market.

“Although the Mongolian Development Bank was formed only five months ago, it has already become an important tool to implement the financing of nationwide infrastructure development projects of the government,” said Prime Minister S. Batbold. According to the bank, bonds will finance projects such as new rail lines and Sainshand petroleum refinery.

Standard & Poor's recently rated the Development Bank of Mongolia's bonds “BB-.” The situation in Mongolia is generally safer than developed countries, where the potential for economic recession can spook investors. The economy has grown at a furious pace with World Bank data showing gross domestic product (GDP) growth at 20.8 percent in the third quarter, while debt stands at about 42 percent of GDP growth. The bonds would offer investors a chance to diversify their Asian sovereign bond portfolio and attract foreign investment banks interested in Mongolia.

“In a country like Mongolia, where there is a big conflict of interest between the public and private sector, we should make a perfect contract and make the entire process open and transparent in order to create these ambitious construction projects with credit,” said political commentator D. Jargalsaikhan. “If we fail to implement the ambitious projects in a timely and efficient manner, then the credit rating of our government would be even worse.”