Moody's may downgrade Mongolian banks

Moody's Investors Service said it put on review for possible downgrade various ratings of three Mongolian banks: Khan Bank, XacBank and the Trade and Development Bank of Mongolia.

Ratings on review include Khan Bank's Ba2 long-term foreign-currency issuer rating and senior unsecured medium-term notes, Baa3 long-term domestic issuer rating and senior unsecured medium-term notes, Ba2 foreign-currency subordinated medium-term notes and Ba1 domestic subordinated medium-term notes and XacBank's Ba2 long-term foreign-currency issuer rating and Ba1 long-term domestic issuer rating.

Also on review are Trade and Development Bank of Mongolia's Ba2 long-term foreign-currency issuer rating; Ba2 foreign-currency senior unsecured notes, medium-term notes, subordinated medium-term notes and junior subordinated notes; and Ba1 long-term domestic issuer rating.

The agency said the review follows its recent decision to review for possible downgrade Mongolia's sovereign ratings, including its Ba2 foreign-currency bond ceiling and B1 local/foreign- currency ratings for government bonds.

Moody's said it will also review whether the foreign-currency debt ratings of the individual banks should be better aligned, or even capped, by Mongolia's foreign-currency government bond rating (current and future). The agency said this additional review is being conducted because of its concern that deterioration in Mongolia's external payments position may limit the government's ability to provide foreign-currency liquidity support to the country's banks.

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