Pinsent Masons advises IFC on landmark investment in Mongolia’s first ever green bond issuance

The firm advised on IFC’s investment, alongside Dutch entrepreneurial development bank, FMO, and US-based microfinance investor, MicroVest Capital Management, in Khan Bank’s US$60 million issuance of five-year green bonds.    

Khan Bank, Mongolia’s largest commercial financial institution, will use funds raised by the issuance to grow its climate portfolio by funding projects that support renewable energy, energy efficiency, climate-smart agriculture, and sustainable building and mobility.

IFC’s investment supports Mongolia’s goal to increase green lending from 1.4% at present to 10% of all banking sector lending by 2030.

James Harris, head of Finance & Projects in Asia at Pinsent Masons said: “Mongolia is facing significant environmental challenges. Green bond issuances like this one are a crucial tool in helping developing countries attract the right international investment needed to progress climate ambitions and kickstart vital infrastructure and energy projects to drive net zero journeys. This investment supports Mongolia’s sustainable finance development, helping the country develop and adopt the necessary environmental and social risk management requirements for commercial banks.”

The Pinsent Masons team was led by partner James Harris and included senior associate Tony Nicholson, and associates Olivia Wang and Qiyu Lu.

Pinsent Masons has recently advised IFC on a number of landmark impact financing transactions in Mongolia. Earlier this year, the team advised IFC on a US$130 million syndicated loan to Khan Bank to support funding the recovery and growth of Mongolian micro, small and medium enterprises (MSMEs). In December 2022, the team also advised IFC on a US$130 million syndicated loan to Mongolia’s fifth largest bank, XacBank, with proceeds going to support the funding of green projects and MSMEs in Mongolia.

Mongolia has committed to reducing greenhouse gas emissions by 22.7% by 2030. The annual financing required to achieve Mongolia’s green development targets is estimated to be $413m, with 80% expected to come from international investors and private sector players.