On the ground in Mongolia: a frontier market on the fast track

Mongolia’s commodity-led growth and urgent infrastructure needs should support a growing pipeline of international dollar bond issuance, although frontier-market risks require on-the-ground credit research.

• The economy has developed robustly over the past three years on strong commodity exports, while Mongolian issuers have increased their US dollar bond issuance.
• Meetings with six commercial banks indicated that lending growth should remain in the mid-teens in 2026, albeit slower than before, with financing increasingly directed toward small and medium-sized enterprises.
• Banks are expanding digital channels and partnering with international financial institutions on sustainable lending, while non-performing loans appear broadly controlled after tighter regulation of risky retail lending.
• Mongolia’s energy deficit reflects surging consumption and ageing Soviet-era infrastructure; the author experienced two hotel power outages during the June visit, before peak winter demand.
• A power project’s Phase 1 was commissioned in 2025, while Phase 2 is scheduled for delivery between 2027 and 2028 and should ultimately supply more than one-third of Ulaanbaatar’s energy demand.

Takeaway: Aberdeen remains optimistic on Mongolia’s near-term growth and favours issuers in strategically important sectors, expecting active dollar issuance and a larger presence in Asian credit, but the frontier-market opportunity depends on detailed issuer and project due diligence.