The Asian Development Bank (ADB) has invested $12.5 million in a green bond issued by Khan Bank JSC under the first green thematic bond program on the Mongolian Stock Exchange.
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The proceeds from the three-year bonds will be used to provide green sub-loans, with a strong focus on supporting small and medium-sized enterprises (SMEs) and microenterprises, particularly those owned or managed by women.
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The European Bank for Reconstruction and Development (EBRD) has invested an equal amount in the Khan Bank bond, together ADB and the EBRD as strategic investors, fully subscribed to the entire United States dollar tranche. An additional $5 million tranche denominated in togrog was offered to local retail investors.
“This landmark green bond offering deepens Mongolia’s green finance market while enabling inclusive investments to support small businesses, including those run by women, and improve the livelihoods of smallholder farmers,” said ADB’s Director General for the Private Sector Operations Department Suzanne Gaboury. “ADB is pleased to support Khan Bank in this milestone green bond issuance, which sets a precedent for future inclusive green financing in Mongolia.”
In 2019, the Financial Stability Council of Mongolia approved a green taxonomy to help identify and classify investments based on their environmental sustainability. The banking sector has committed to achieving a green loan target of 10% by 2030. So far only a few banks are funding green investments, and their green loan book is nascent at only 3.2% of loans outstanding as of June 2024.
“This placement of a United States dollar-denominated green bond in Mongolia highlights Khan Bank’s ability to attract new international funds in its capital market. This is through an innovative asset class while demonstrating the confidence that international investors have in Khan Bank,” said Khan Bank Chief Executive Officer Munkhtuya Rentsenbat. “This issuance aligns with our strategy to become the leading provider of green finance in the country while supporting our clients on their journey towards transition and adopting green and sustainable practices while contributing to the country’s climate goals.”
ADB’s vision is to achieve a prosperous, inclusive, resilient, and sustainable Asia and Pacific, while sustaining its efforts to eradicate extreme poverty. Despite the region’s many successes, 1 in 3 people still live under $3.20 a day – that’s 1.24 billion people. ADB will continue to prioritize the region’s poorest and most vulnerable countries.
Khan Bank is Mongolia’s largest bank, serving over half a million borrowers, including low-income small and microenterprise, and self-employed farmholders and livestock herders. More than half of Khan Bank’s customers come from rural regions, and over half of SME borrowers are women
ADB is committed to achieving a prosperous, inclusive, resilient, and sustainable Asia and the Pacific, while sustaining its efforts to eradicate extreme poverty. Established in 1966, it is owned by 69 members—49 from the region.
About ADB
The Asian Development Bank (ADB) is committed to achieving a prosperous, inclusive, resilient, and sustainable Asia and the Pacific, while sustaining its efforts to eradicate extreme poverty. It assists its members and partners by providing loans, technical assistance, grants, and equity investments to promote social and economic development.
Established in 1966, ADB is owned by 68 members, including 48 from the region. Its main instruments for helping its developing member countries are policy dialogue, loans, equity investments, guarantees, grants, and technical assistance.
