Interview with Angar.D, CEO of Mongolian Stock Exchange
-What is the demand for insured corporate bonds?
-Total amount of “Erchim” bonds is MNT500.0 million. The buy order of this bonds already exceeded the limit right after an hour of MSE’s registration. Therefore, I think demand for this bonds is way more than its supply. The coupon rate of this bonds is more than interest rates of any other commercial banks, plus it is very safe investment. You could sell your bond on its secondary market trading and get cash anytime. Anyone who make buy order could buy this bonds due to equal distribution.
-I do understand that the trading of this bonds will be successful, is there any company who has interest of issuing corporate bond?
-Participants of capital market accepted this bond trading very positive way. Previously, business entities have only one path to raise money, but now another path to raise money became available. This kind of securities already proved as one reliable financial instrument in global market, I am sure that it will work same way in our market. Currently, there are three companies are under bond preparation worth MNT5-6 billion. We will help Mongolia’s Top-100 companies to issue securities in capital market. In future, companies will be able to trade share to the public.
-What requirement do you take from bonds Issuer Company?
-Corporate bonds is loan; therefore, company should able to pay back the loan. The requirement supposed to be high because of insurance company responsible for company and its effective operation. In last 25 years, the development of banking sector was very high. On the other hand, the development of capital market and insurance sectors were very low, they are not ready for a big amount of transaction. So this year, we have ability to trade maximum of MNT10-20 billion insured bonds. Anyways, these two sectors are able to develop at same time.
-How much bond order are you taking from individual citizens?
-The bond order is not closed yet, so I am not able to give detailed information right now. Individual citizens could order bond amount of MNT10,000 or MNT500.00 million. Unfortunately, our citizens’ level of financial knowledge is low. They still having MNT100,000-200,000 in their current account. If they invest on bonds, their money will be increased more than commercial bank. Mongolian Stock Exchange has been working on to improve financial knowledge of our citizens.
-Is it right that the coupon rate of Government bond lowered after it started traded through Mongolian Stock Exchange?
-When Government bond traded through Mongol Bank, the coupon rate were increased to 16% from 9%. But now, it lowered by 1.5-2% so far. The coupon rate of corporate bonds eligible to be lowered. We estimated that the coupon rate of bonds will be lowered to 12-15%, so investors should take advantage now.
-Do you have any plan to introduce new products in near future?
-It is difficult to introduce new products right now because our market is not fully developed. The Government bonds trading has been conducted at MSE for 8-9 months. We are working on to traded corporate bonds at this time. In near future, we might have possibility to introduce derivatives based on corporate bonds.
-Some state-owned companies will be privatized at Mongolian Stock Exchange. How the preparation is going on?
-Mongolian parliament approved the Resolution to privatize 9 state-owned companies through MSE. Financial Regulatory Commission, MSE and specialist of State Property Committee /SPC/ organized the training for managements of these state-owned companies. I believe 2-3 companies will be privatized this year and MSE is ready for it. If these companies changed to public companies, the privatization process should be transparent and shares should be distributed to as many as investors.
-What is the demand for insured corporate bonds?
-Total amount of “Erchim” bonds is MNT500.0 million. The buy order of this bonds already exceeded the limit right after an hour of MSE’s registration. Therefore, I think demand for this bonds is way more than its supply. The coupon rate of this bonds is more than interest rates of any other commercial banks, plus it is very safe investment. You could sell your bond on its secondary market trading and get cash anytime. Anyone who make buy order could buy this bonds due to equal distribution.
-I do understand that the trading of this bonds will be successful, is there any company who has interest of issuing corporate bond?
-Participants of capital market accepted this bond trading very positive way. Previously, business entities have only one path to raise money, but now another path to raise money became available. This kind of securities already proved as one reliable financial instrument in global market, I am sure that it will work same way in our market. Currently, there are three companies are under bond preparation worth MNT5-6 billion. We will help Mongolia’s Top-100 companies to issue securities in capital market. In future, companies will be able to trade share to the public.
-What requirement do you take from bonds Issuer Company?
-Corporate bonds is loan; therefore, company should able to pay back the loan. The requirement supposed to be high because of insurance company responsible for company and its effective operation. In last 25 years, the development of banking sector was very high. On the other hand, the development of capital market and insurance sectors were very low, they are not ready for a big amount of transaction. So this year, we have ability to trade maximum of MNT10-20 billion insured bonds. Anyways, these two sectors are able to develop at same time.
-How much bond order are you taking from individual citizens?
-The bond order is not closed yet, so I am not able to give detailed information right now. Individual citizens could order bond amount of MNT10,000 or MNT500.00 million. Unfortunately, our citizens’ level of financial knowledge is low. They still having MNT100,000-200,000 in their current account. If they invest on bonds, their money will be increased more than commercial bank. Mongolian Stock Exchange has been working on to improve financial knowledge of our citizens.
-Is it right that the coupon rate of Government bond lowered after it started traded through Mongolian Stock Exchange?
-When Government bond traded through Mongol Bank, the coupon rate were increased to 16% from 9%. But now, it lowered by 1.5-2% so far. The coupon rate of corporate bonds eligible to be lowered. We estimated that the coupon rate of bonds will be lowered to 12-15%, so investors should take advantage now.
-Do you have any plan to introduce new products in near future?
-It is difficult to introduce new products right now because our market is not fully developed. The Government bonds trading has been conducted at MSE for 8-9 months. We are working on to traded corporate bonds at this time. In near future, we might have possibility to introduce derivatives based on corporate bonds.
-Some state-owned companies will be privatized at Mongolian Stock Exchange. How the preparation is going on?
-Mongolian parliament approved the Resolution to privatize 9 state-owned companies through MSE. Financial Regulatory Commission, MSE and specialist of State Property Committee /SPC/ organized the training for managements of these state-owned companies. I believe 2-3 companies will be privatized this year and MSE is ready for it. If these companies changed to public companies, the privatization process should be transparent and shares should be distributed to as many as investors.
Source: Sanjaasuren.N, Unuudur Sonin 2015.08.18
Marketing and Public Relations Department
MONGOLIAN STOCK EXCHANGE
MONGOLIAN STOCK EXCHANGE