State bank raises USD 30 million through collateral swap transaction


2018-07-25 17:30 GMT+8

 According to Frontclear, a land­mark transaction between State Bank of Mongolia, EBRD and ING have been facilitated. “Frontclear arranged and structured the USD 30 million cross-­border collateral swap with the European Bank for Reconstruction and Development (EBRD), enabling a further repo transaction between the Mongolian State Bank and ING Bank. It is the first time in Mongolia that a repo or collateral swap transaction has been done with local currency collateral cross border and a first such deal involving a commercial bank”, says Frontclear.

In this transaction, Frontclear borrowed USD 30 million in US Treasury bonds from the EBRD and then on-­lent them to the State Bank LLC in Mongolia against Mongolian local currency government bonds in a collateral swap transaction. Front­ clear guaranteed the transaction to EBRD. With the US treasuries in hand, State Bank LLC borrowed funds in a repo transaction with ING Bank N.V. Singapore branch.

"State Bank is delighted for successfully executing this inaugural transaction that provides possibilities to prac­tice the financial instrument in line with international best practice and facilitates development of interbank money market in broader perspec­tive in Mongolia" said Chinbat Lkhagvasuren, Director General of Treasury Department at the State Bank of Mongolia. State bank of Mongolia expects the long term, USD denominated financing will help increase affordable business loans in Mongolia.

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