Sept. 11 (Bloomberg) — ING Groep NV, the largest Dutch financial services company, has been hired to manage a $300 million bond program for Mongolia’s Khan Bank LLC, paving the way for the Asian country’s largest ever dollar bond sale.
Amsterdam-based ING signed an agreement with Khan Bank for the global medium-term note program ahead of the official opening today of the Dutch company’s first office in Mongolia, said Sergelen Tsedendamba, the branch’s chief representative.
The new office, based in the capital of Ulan Bator, will “allow us to better serve the needs of Mongolian companies,” Tsedendamba said on the sidelines of a conference in the city yesterday. His company is considering financing companies in Mongolia’s mining, infrastructure and transportation industries.
The note program gives Khan Bank, the country’s largest, an avenue to sell as much as $300 million of bonds to investors. If sold all at once, it would eclipse the $75 million of debt that Trade & Development Bank of Mongolia LLC sold in January 2007, which was the country’s first dollar bond sale.
Khan Bank doesn’t plan to sell dollar bonds in 2008, a person involved in the matter said.
Any bond sale will add to the $150 million in cash assets that Khan Bank already has. The lender is aiming to boost its share of the loans market to 30 percent within four years by adding branches and making acquisitions, Chief Executive Officer Peter Morrow said in an interview on Sept. 9.
Khan Bank had 483 offices and controlled 22.5 percent of Mongolia’s lending market as of June, surpassing Trade & Development Bank’s 18.4 percent and Golomt Bank of Mongolia‘s 15.9 percent. The company’s 2007 profit jumped 62 percent to 19.4 billion tugriks ($16.9 million) as loans doubled.
Lending has been fueled by an economy that grew 12.5 percent in the first quarter, the fastest since 2002, according to Asian Development Bank figures.
Trade & Development Bank’s three-year $75 million 8.625 percent bonds were priced to yield 3.94 percentage points more than U.S. Treasuries, data compiled by Bloomberg show. The securities traded at 1,305 basis points above the U.S. benchmark at 11:31 a.m. in Hong Kong, up 67 basis points from yesterday, ING’s prices show. A basis point is 0.01 percentage point.