Mongolian Railway SOJSC has successfully raised 300 billion togrog from the domestic capital market. The company issued the MTZ bond to finance a strategically significant infrastructure project. This MTZ bond represents the first financial instrument in Mongolia’s history issued by a state-owned enterprise. Moreover it is the first such bond secured by the company’s own assets.
The issuer offered the MTZ bond to investors with a one-year maturity. The annual interest rate stands at 17 percent for this instrument. Tenger Capital Securities Company organized the issuance in close cooperation with Mongolian Railway. Consequently this transaction expands Mongolia’s domestic capital market significantly. It also opens new opportunities to finance major infrastructure projects using market principles.
Following the successful MTZ bond issuance, Tenger Capital’s management met with key officials. They met Minister of Road and Transport Delgersaikhan Borkhuu and CEO Batchuluun O. of Mongolian Railway SOJSC. Both sides expressed appreciation for their productive cooperation on this landmark deal. The financing will now fund the Bagakhangai–Khushig Valley–Emeelt railway project. This railway line represents a strategic priority for Mongolia’s infrastructure development.
The company plans to repurchase the MTZ bond ahead of its maturity date. It will attract long-term, low-interest investment from international banks to do so. Many financial institutions abroad have shown interest in Mongolian infrastructure projects. Therefore the early repurchase strategy appears feasible and prudent. The 17 percent interest rate reflects current domestic market conditions. However international financing would offer considerably lower rates in the future.
This MTZ bond sets a precedent for other state-owned enterprises in Mongolia. They can now consider similar asset-backed issuances for their own projects. The success also demonstrates growing investor confidence in Mongolian SOEs. Market analysts view the transaction as a test case for corporate bond market development. If repayment proceeds smoothly, more issuances will likely follow. The railway project itself will enhance connectivity between key economic zones. Thus the MTZ bond serves both financial and developmental purposes simultaneously. Investors will watch the project’s progress closely over the coming year.
