Moody's changes Mongolia outlook to negative

Moody's Investors Service said it changed the outlook on Mongolia's government bond rating to negative from stable and affirmed the government's B1 issuer and bond ratings.

In a related rating action, Moody's changed the outlook on government-owned Development Bank of Mongolia LLC to negative from stable and affirmed its B1 senior debt rating.

The agency said its decision to change Mongolia's outlook to negative is driven by a rise in the external debt burden over recent years, a sharp fall in foreign exchange reserves and escalating credit growth since 2013. These developments increase the possibility of a currency or external payments crisis over the next few years, Moody's said.

The affirmation of Mongolia's B1 sovereign rating reflects the fact that although external liquidity is strained, a balance of payments crisis does not appear imminent since there are no significant maturing debt obligations this year and the first large sovereign bond repayment is not due until 2017, the agency added.

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