China Eximbank participates in Facility A of $300 million syndicated loan to Development Bank of Mongolia for on-lending purposes (Linked to Project ID#72879)

On August 29, 2014, the Development Bank of Mongolia (DBM) signed a $300 million loan agreement with Credit Suisse AG to finance energy production and energy transfer infrastructure, manufacturing, infrastructure and mining projects. The original terms of the loan agreement divided the loan into two facilities: Facility A ($185 million over a term of five years) and Facility B ($15.0 million over a term of three years). The agreement also included a $100.0 million ‘greenshoe option’. Pursuant to a syndication and amendment agreement on December 11, 2014, Sumitomo Mitsui Banking Corporation Seoul Branch, the Export-Import Bank of China, and the Export-Import Bank of the Republic of China (Taiwan) joined the agreement as additional lenders and increased the size of Facility A to $270.0 million and Facility B to $30.0 million. Facility A carried an interest rate of LIBOR plus a 4.375% margin and maturity of 5 years. It was scheduled to begin amortizing after 30 months from the facility agreement date. Facility A had fully disbursed as of December 31, 2014. Facility B carried an interest rate of LIBOR (0.330% in August 2014) plus a 4.250% margin and it had a bullet repayment schedule. Facility B had fully disbursed as of December 31, 2014. Project ID#66227 captures China Eximbank’s estimated contribution to Facility A, while Project ID#72879 captures China Eximbank’s estimated contribution to Facility B. The Government of Mongolia’s Ministry of Finance provided a sovereign guarantee for this loan (including Facility A and Facility B). On August 19, 2016, S&P lowered Mongolia’s long-term sovereign rating from “B” to “B-.” Under the terms of the August 29, 2014, the lenders had the right upon 10 business days prior notice to accelerate all outstanding loan amounts, together with accrued interest. The lenders also had the right to immediately accelerate payments if the Government of Mongolia ceased to own, legally and beneficially (whether directly or indirectly), 100.0% of DBM’s issued share capital.

Additional details

1. AidData has estimated the all-in interest rate (4.705%) that applies to Facility A by adding 4.375% to average 6-month LIBOR in August 2014 (0.330%). AidData has estimated the all-in interest rate (4.581%) that applies to Facility B by adding 4.250% to average 6-month LIBOR in August 2014 (0.330%). 2. In a syndicated loan transaction with a greenshoe option, the option is granted to and allows the borrower to upsize their facility with the syndication of lenders. The purpose of the green-shoe may be to protect the borrower from the surge of the interest rate and reduce the cost of amendment or restructuring of the facility during its lifetime. In the meantime, then lenders will not have to arrange additional deals to extend new facilities or retain the services to amend the agreements. The borrower may exercise the option by delivering an increase request to the facility agent and the facility agent's acceptance of the confirmations from increased lenders, the borrower then can raise the original total commitment committed by the lenders. 3. The exact size of China Eximbank’s contribution to Facility A is unknown. For the time being, AidData assumes that all 4 members of the lending syndicate contributed equally ($67.5 million) to the $270 million loan tranche The exact size of China Eximbank’s contribution to Facility B is unknown. For the time being, AidData assumes that all 4 members of the lending syndicate contributed equally ($7.5 million) to the $30 million loan tranche.

Number of official sources

5

Number of total sources

6