Fitch puts Mongolian bank on watch

Fitch Ratings said it placed its B issuer default and senior unsecured ratings for the Development Bank of Mongolia on rating watch negative.

“The RWN reflects heightened refinancing risk. We believe the Mongolian sovereign (B/stable) has the ability and propensity to support DBM, but a lack of timely preparedness for two major bond maturities amid unfavorable market conditions, including a US-dollar bond maturing on Oct. 23, 2023, has raised refinancing risk and has led Fitch to reassess DBM's importance to the state as a policy bank, despite DBM's 100% government ownership,” the agency said in a statement.

Fitch warned it could downgrade the government-owned DBM if it perceives the risk of default is possible. “The ratings could also be downgraded if we believe DBM's policy role and importance to the state have diminished, even if the full government ownership remains unchanged.”

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