Saturday, July 12, 2014

Mongolia's TDBM pulls U.S. dollar bond due to Europe debt turmoil-IFR

(Reuters) - Trade and Development Bank of Mongolia, or TDBM, pulled a planned U.S. dollar bond offering because of financial market turmoil triggered by a debt crisis at Portugal's Banco Espirito Santo, IFR reported, citing a banking source.

TDBM, the largest bank in Mongolia, had expected to sell a 5-year bond. It was indicating a yield in the area of 11.25 percent on Thursday morning.

"When Europe opened, European accounts were shut due to the soured sentiment. So it is only prudent for us to call the deal off and wait for a better window to tap the market," a banker on the TDBM deal said.

"Also with this volatility, the deal would not be performing well in the secondary market," the banker added.

The TDBM's cancelled offering was part of the bank's $1 billion medium-term notes (MTN) program.

The bank is 73.1 percent owned by Chairman Erdenebileg Doljin and his son Tulga Erdenebileg and 5 percent by Goldman Sachs. The rest is owned by a few other individuals, according to the prospectus.

Portugal's BES reportedly missed a coupon payment on its bonds. Global equity markets tumbled on the news as investors began to worry about the health of European banks.

In spite of the high yield on Mongolia's proposed bond, investors had already been concerned about prospects for the country's commodity-reliant economy and the bank's concentration of loans to the commodity and construction sector.

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