Mongolia’s debt is trading at its highest level in almost two years after the government reached a $5.5bn bailout agreement with the International Monetary Fund.

Prices for its actively-traded 5.125 per cent bonds due in 2022 jumped from 88.78 to 93.20 on Monday. Prices below 100 – that is par, or face value – imply a higher risk investors won’t get paid in full.

Monday’s level was the note’s highest since May 22, 2015. It was last above par on January 9, 2013.

Just weeks before a $580m payment was due on a bond issued by the Development Bank of Mongolia, the IMF said it would provide funds to the mining-dependent country conditional on Mongolia’s parliament approving fiscal discipline measures which include repeal of a popular cash subsidy for all families with children.

The Mongolian government also said on Sunday it planned to launch an exchange offer this week for the DBM bonds, swapping them for government debt – though it gave no maturity for the new bonds.

In a statement, the IMF’s head of mission in Ulan Baator Koshy Mathai said:

This agreement is subject to the confirmation of financing assurances, the completion of prior actions by the authorities, and the approval of the IMF Executive Board. The Board is expected to consider Mongolia’s request in March.

Mongolia is well endowed with mineral resources, strong potential in agriculture and tourism, and a young and dynamic population. Its long-run future is promising, but in recent years it has been hit hard by the sharp decline of commodity prices and a collapse in foreign direct investment.

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