Mongolian Market Updates | June 23rd

🌄 Good morning!

Dive into the this weeks on Mongolia's economic and financial markets! The Asian Development Bank issued its largest MNT-denominated bond, the Mongolia’s newly formed government, and other notable updates.

🗞️ In this week’s issue:

• The Asian Development Bank’s the largest MNT-denominated bond in history

• Newly appointed Ministers of The Government of Mongolia

• CMM Market Update

• Market News

🟣 The Asian Development Bank (ADB) has issued its second MNT-denominated bond of the year.

On June 18, the Asian Development Bank (ADB) issued a MNT-denominated bond worth MNT 55.8 billion (approximately USD 15.6 million) to support a dairy production project in Mongolia.

This bond marks the largest MNT-denominated issuance by ADB to date. With a tenor of 6.1 years and a coupon rate of 10.3%, it is also the longest-dated and highest-value MNT bond since ADB’s inaugural “Nomad” bond issued in 2020.

The proceeds from the bond will be used to finance the dairy production project implemented by APU Dairy LLC, specifically for:

🏭 Construction of a new factory
🥛 Expanding milk processing and packaging capacity
🐄 Establishing raw milk collection points
💰 Financing working capital and related needs

Earlier this year, in April, ADB also issued its first education bond in Mongolia—worth MNT 45.7 billion (approximately USD 13.1 million)—to support the country's ongoing education sector projects.

🟣 The Government of Mongolia has appointed its new Ministers.

The new Prime Minister, Zandanshatar G., has presented the structure and composition of the new Cabinet to the Parliament of Mongolia, which consists of a total of 19 ministers.

• The Mongolian People's Party (MPP), HUN Party (HUN), and Civil Will–Green Party (CWGP) will collaborate;

• The number of ministries remains unchanged at 16;

• The following programs and bodies will be dissolved: “20-Minute City” initiative, “Port Revival” program, and the Oversight and Evaluation Committee.

🟣 CMM Market Update

📉 Fitch Ratings highlights that the sharp decline in coal export revenues poses a key fiscal risk for Mongolia’s newly formed government.

According to Fitch Ratings, “Risks to public finances could be further heightened if the authorities opt to loosen fiscal policy in response to the recent bout of public protest.”

📊 Budget and Current Expenditures

As of April this year, current expenditures have increased by 20% compared to the same period last year.

Although Mongolia has set fiscal rules to cap:

• Current expenditures at 30% of GDP,

• Government debt at 60% of GDP, and

• Structural deficit at 2% of GDP,
  Fitch notes that the government's track record of enforcing these limits remains weak, casting uncertainty over the commitment to strict adherence.

🏗 Major Projects and Fiscal Deficit

While the government has expressed its intention to support 14 large-scale (mega) projects, these will require significant medium-term investment to be successfully financed.

Fitch Ratings estimates that if no fiscal adjustments are made in the face of declining commodity revenues in 2025, the overall budget deficit could widen to 3.0% of GDP.

🏛️ Market News

📈 [MSE:TUM] Tumen Shuvuut JSC repurchased 32,403 shares last week.
Tumen Shuvuut JSC executed a share buyback on the secondary market, purchasing 32,403 shares for a total of MNT 12.3 million, following a board decision to repurchase shares from the market.

📈 [MSE:TTL] Tavantolgoi JSC shares gained +4.26%.
After a 14.83% decline since the beginning of the year, Tavantolgoi JSC’s stock has rebounded in recent days, recovering lost market value.

📈 [MSE:AARD] Ard Financial Group JSC has repurchased 4,335,026 shares.
On April 24, 2025, the Board of Directors of Ard Financial Group JSC approved a share repurchase of up to MNT 12.66 billion. As of now, a total of 4,335,026 shares have been repurchased under this program.

🟣CMM Services

Capital Markets Mongolia (CMM) advises publicly listed companies on effectively engaging with investors, defining optimal strategies for IPOs and bond issuances, and participating in the capital market in a reputable and efficient manner.