Mongolia’s 2027 Refinancing Test: Maturities, Funding and Cost

Global bond markets are entering a materially higher-yield environment. The US 30-year Treasury yield has risen from 5.31% in August to 5.45% last week and 5.62% today, with each move marking a new post-crisis high. Across other major developed markets, yields have also reached levels not seen in more than a decade: the US 10-year has moved above 5% for the first time since 2007, the UK 10-year above 5.4%, France above 4.5%, Germany to 3.5%, while Japan’s 10-year yield has reached 3%, its highest level since 1996.

For global fixed-income investors, the message is increasingly clear: the higher-for-longer rate environment may persist well into the next 12-15 months, keeping the baseline cost of capital elevated for emerging and frontier-market borrowers.

For Mongolia, the timing is particularly important. After three years in which issuers have demonstrated their ability to access international capital markets, the country is entering a significant refinancing cycle. The next phase will test not simply whether Mongolian issuers can raise capital, but whether they can refinance at an acceptable cost when global funding conditions are considerably less accommodating.

Of the USD 6.51 billion of international bonds currently outstanding across 11 Mongolian borrowers, approximately USD 2.46 billion, or 38%, matures within the next two years. The concentration is highest in 2027, when USD 1.59 billion falls due, making it the largest annual maturity requirement until 2031. A further USD 869 million matures in 2028.

Recent liability-management transactions have therefore reduced gross refinancing pressure and helped smooth the maturity profile. The sovereign has also maintained a relatively staggered maturity structure, while recent repurchases have reduced near-term concentration. The IMF has identified proactive liability management as an important component of Mongolia’s medium-term financing strategy.

The 2027 Non-Sovereign Maturities

Mongolian Mortgage Corporation has the earliest maturity, with USD 185 million due in January 2027. An earlier buyback has already reduced the original USD 225 million issue. With the remaining balance relatively modest. We expected that the issuer will redeem the notes at maturity rather than return to the international market.

Golomt Bank has already addressed a substantial portion of its May 2027 maturity. Its tender offer, conducted alongside the bank’s USD 500 million 2029 issuance, reduced the outstanding balance of its 11% notes to approximately USD 181 million. Relative to the bank’s recent funding activity, the remaining maturity represents a substantially smaller due amount. Similar to MIK we expect that the issuer will also redeem the notes at maturity rather than returning.

The City of Ulaanbaatar faces the largest single non-sovereign maturity, with USD 500 million due in August 2027. Unlike the other issuers, the city has not made an early repayment. The bonds benefit from a Government guarantee, and city officials indicated at issuance that the intention was to refinance the notes with a new bond before maturity. Parliament also approved additional borrowing capacity of more than USD 200 million for the city earlier this year.

The key question is therefore less about market access than the source and structure of repayment funding. The 2.75-year, 7.75% bond was raised to finance the Selbe Sub-Center ger district housing project, which has fallen well behind schedule. Construction was originally due to run from 2024 to 2026, but a delayed tender has pushed the project into 2028, and it was only about 30.4% complete as of August 10, 2026. In effect, a short-dated bond is funding a long-dated project. Recent local reporting indicates that the city has faced challenges deploying the original bond proceeds. At the same time, tighter restrictions on capital-city borrowing in 2027 could limit the flexibility available for a straightforward refinancing.

Trade & Development Bank has the latest 2027 maturity, with USD 300 million due in December. The bank has not yet reduced the outstanding amount but has signalled an intention to refinance. In late June, Moody’s assigned a B1 rating to a proposed TDB US-dollar note, shortly after upgrading the bank itself to B1. No transaction has been priced since, suggesting that TDB may be waiting for a more favourable issuance window.

The Sovereign issuance to set the tone

For the sovereign, the USD 423 million Mongolia 2027 maturity due in July presents a different challenge. Market access is unlikely to be the principal constraint; the cost of refinancing will be more important.

The draft 2027 budget authorises up to USD 1 billion of new external bond issuance. However, refinancing a bond carrying a 3.5% coupon at current market yields of approximately 6-7% would materially increase the sovereign’s interest expense. A higher sovereign funding cost can therefore establish a higher floor for the entire domestic credit curve.

The question is whether Mongolia’s expanded international issuance capacity can translate into efficient refinancing across a broader range of domestic borrowers.

What Will Determine Mongolia’s Cost of Capital Beyond 2027?

The funding cost of Mongolia’s external borrowing will increasingly be determined by the interaction between global rates and domestic fiscal and debt-management policy.

Global Rates and Risk Appetite

The trajectory of US inflation, Federal Reserve policy, Treasury yields and global risk appetite will establish the baseline cost of funding. A higher-for-longer environment would create a more challenging backdrop for frontier-market borrowers, particularly those seeking longer-dated financing.

Fiscal Policy and Debt Management

Domestic policy will be equally important. Mongolia has made meaningful progress in debt management in recent years through sovereign liability-management transactions and efforts to reduce refinancing concentration. But the draft 2027 budget envisages MNT 43.6 trillion of expenditure and authorises up to USD 1 billion in new external bonds, alongside domestic government notes issuance up to MNT 2 trillion along with government guarantees for quasi sovereign issuers. It goes in the opposite direction as it raises government debt. If materialized how these previous obligations are financed and whether fiscal expansion is accompanied by a credible medium-term debt strategy-will influence investor perceptions of Mongolia’s credit.

The 2027-2028 cycle will ultimately provide an important test of how far Mongolia’s international bond market has matured. The question is no longer simply whether Mongolian issuers can reach international investors. It is whether they can manage maturities, control funding costs and preserve investor confidence through a less favourable global rate environment.

For issuers, preparation begins well before the next maturity date. For investors, the coming refinancing cycle will provide an opportunity to distinguish between borrowers not only by their ability to access capital, but by the strength of their fundamentals, the credibility of their strategies and their long-term financial discipline.

To learn more, read our latest Investor’s Guide to Mongolia: Bonds.

Join us at the Mongolia Investment Forum: Singapore on November 18 to hear directly from issuers and key stakeholders shaping Mongolia's fixed-income market, and to discuss the opportunities and challenges ahead for Mongolian credit.