S&P moves Mongolian Mortgage view to negative

S&P said it revised its outlook on Mongolian Mortgage Corp. HFC LLC (MIK) negative from stable.

“The outlook revision reflects our view that the improvement in MIK's profitability over the next 12 months is likely to be less than we expected. This could lead to a slower accumulation of capital and may push our estimated RAC ratio for the company to sustainably below our downgrade trigger of 7%,” S&P said in a press release.

“We attribute the likely reduced improvement in MIK's profitability to lower yields on new mortgages and slower deployment of U.S. dollar bond proceeds to purchase mortgage loans under the liquidity-provider business. MIK had issued $250 million bonds in February 2021 to refinance about $193 million of its 2019 U.S. dollar bonds related to this business. As of end March 2021, about $87 million of the company's 2019 U.S. dollar bonds remain outstanding,” the agency said.

Concurrently, S&P affirmed its B ratings on the company and its senior unsecured notes.

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