Asia Fixed Income Analyst

Derek Silva

Credit

Mongolian Mining (bond ticker: MONMIN) is a name that has historically been better known among the distressed experts in Asia High Yield. It was trying to get back into the ranks of fundamentally sound issuers after a debt restructuring in 2016 and the launch of a new bond in April 2019. The new bond spent much of 2019 trading in the 90s and then Covid-19 pushed it much lower. While it has rebounded somewhat with the rest of the market, the bond is still at a cash price below 80 and an attractive yield of ~18%.  Now there might be a catalyst for the Mongolian Mining bond again. The latest figures from China indicate that imports of coking coal from Mongolia have gotten a strong boost in September and likely into October, as imports from Australia plummeted in September and are reportedly being stopped in October due to political pressure.<section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/167/849/original/Screenshot%202020-10-27%20at%2017.27.01.png?1603794440" class="editor-image img-responsive" data-smartkarma-image-id="167849"></figure></section>The cash price of ~77.8 and yield of ~18% for the Mongolian Mining 2024 bond might look interesting here for investors who are willing to take on the risk. It must be said that the bond won’t, and shouldn’t, get back to par (100) any time soon. The company has a checkered past, it is small and one-dimensional, and it had a poor H1 result.But, in the near-term, there should be some upside potential in the bond if the company can take advantage of the China-Australia friction and the good demand from the Chinese steel sector. Already the company’s Q3 coal sales volume indicate this might be the case, as it has shown a nice rebound.

Mongolian Mining (bond ticker: MONMIN) is a name that has historically been better known among the distressed experts in Asia High Yield. It was trying to get back into the ranks of fundamentally sound issuers after a debt restructuring in 2016 and the launch of a new bond in April 2019. The new bond spent much of 2019 trading in the 90s and then Covid-19 pushed it much lower. While it has rebounded somewhat with the rest of the market, the bond is still at a cash price below 80 and an attractive yield of ~18%.  Now there might be a catalyst for the Mongolian Mining bond again. The latest figures from China indicate that imports of coking coal from Mongolia have gotten a strong boost in September and likely into October, as imports from Australia plummeted in September and are reportedly being stopped in October due to political pressure.The cash price of ~77.8 and yield of ~18% for the Mongolian Mining 2024 bond might look interesting here for investors who are willing to take on the risk. It must be said that the bond won’t, and shouldn’t, get back to par (100) any time soon. The company has a checkered past, it is small and one-dimensional, and it had a poor H1 result.But, in the near-term, there should be some upside potential in the bond if the company can take advantage of the China-Australia friction and the good demand from the Chinese steel sector. Already the company’s Q3 coal sales volume indicate this might be the case, as it has shown a nice rebound.

Will Australia's Pain Be Mongolian Mining's Gain?