Fitch Ratings - Hong Kong - 11 Feb 2025: Fitch Ratings has assigned Mongolia's (B+/Stable) proposed US dollar bonds a 'B+' rating.
Key Rating Drivers
The rating is in line with Mongolia's 'B+' Long-Term Foreign-Currency Issuer Default Rating (IDR), which was upgraded with a Stable Outlook from 'B'/Stable on 18 September 2024.
The following ESG issues represent key rating drivers for the proposed bond; other key rating drivers can be found in the issuer rating action commentary dated 18 September 2024.
ESG - Governance: Mongolia has an ESG Relevance Score of '5[+]' for Political Stability and Rights and '5' for the Rule of Law, Institutional and Regulatory Quality and Control of Corruption. These scores reflect the high weight that the World Bank Governance Indicators have in our proprietary Sovereign Rating Model. Mongolia has a medium World Bank Governance Indicator ranking at the 46th percentile.
The rating on the bonds is sensitive to any changes in the Long-Term Foreign-Currency IDR, which has the following rating sensitivities (as per the aforementioned issuer rating action commentary).
RATING SENSITIVITIES
Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade
- External Finances: Materialisation of significant external stress, potentially undermining external financing flows and leading to a decline in foreign reserves, for example as a result of a commodity shock amid expansionary domestic economic policies.
- Public Finances: Significant increase in the government debt/GDP ratio, for example from sustained budget deficits.
- Structural Features: Political instability and/or major policy shifts sufficient to significantly disrupt strategic mining projects or FDI inflows.
Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade
- External Finances: Further reduction in external financing risks, for example through significant accumulation of foreign-currency reserves and reductions in net external debt, accompanied by prudent external debt management.
- Macroeconomic and Structural: Sustained strong economic growth without the emergence of imbalances, supported by a business environment conducive to robust FDI inflows.
- Public Finances: Implementation of prudent fiscal policies consistent with reductions in the government debt/GDP ratio.
Date of Relevant Committee
17 September 2024
REFERENCES FOR SUBSTANTIALLY MATERIAL SOURCE CITED AS KEY DRIVER OF RATING
The principal sources of information used in the analysis are described in the Applicable Criteria.
ESG Considerations
The ESG profile is in line with that of Mongolia.