Source: Reuters                           Date: 03 December, 2010

Mongolia may launch its debut international bond early next year and the deal should total around USD500 million to USD600 million, according to Ms. E. Enkhjargal, chief representative of the London office of the country's Central Bank. "We believe a good size for the bond would be USD500-USD600 million, maximum USD700 million. I think it will be at the beginning of next year," he told reporters on the sidelines of an investment conference last week. Ms. Enkhjargal, a former deputy governor at the Central Bank, said, "We believe (the yield) will be around 5-6 percent."

Mongolia earlier this year shortlisted Deutsche Bank, Goldman Sachs, HSBC, ING and Morgan Stanley as potential lead underwriters for its debut bond. It had indicated earlier that the issuance could be for USD1.2 billion. The Central Bank advised the government to issue a smaller bond, Ms. Enkhjargal said, adding, "USD1.2 billion is too big."

Ms. Enkhjargal also said foreign direct investment (FDI) into the commodity-rich ex-communist country is expected to be USD1.4 billion this year, rising to USD3 billion in 2011. Mongolia received a ratings upgrade to B+ from Fitch last week, while Standard & Poor's rates it BB-.

Ms. Enkhjargal said economic growth next year is seen at 8 percent. A senior Mongolian government official told the conference 2010 economic growth was expected at 7.5 percent. Conference delegates were more bullish. Mr. Kevin Bortz, director of natural resources at the European Bank for Reconstruction and Development, told the conference the EBRD saw Mongolian GDP growth at 9 percent next year. Ms. Enkhjargal said, "We are very conservative at the Central Bank."

While conference delegates expressed concern at Mongolia's high inflation rate of 11 percent, Ms. Enkhjargal said the bank is targeting a single-digit rate in 2011. Mongolia's currency has been appreciating sharply -- up 15 percent this year at 1,245 per dollar. Growth in the economy has been driven by Chinese demand, and the Central Bank has been acting to smooth volatility, Ms. Enkhjargal told the conference, with FX reserves at a record USD1.8 billion. "We do not want to see the MNT changing too much over a short period of time," she added.