S&P lowers Mongolian Mortgage

S&P said it lowered its ratings on Mongolian Mortgage Corp. HFC LLC (MIK) and the company’s senior unsecured notes to B- from B.

“The downgrade mainly reflects our view that MIK's profitability will remain vulnerable over the next 12 months, further weakening the company's capital position. Losses in 2020 and 2021 have already weakened the capital position. The losses are primarily due to lower asset yields even as MIK's funding costs, including foreign currency hedge expenses, are largely fixed,” the agency said in a press release.

S&P also warned the rising U.S. dollar yield curve could also hurt MIK. “The company's financial debt largely comprises fixed U.S. dollar bonds and the principal is hedged for currency risk. While the company's next maturity wall is in February 2024, refinancing could be a year earlier given the past track record.”

The outlook remains stable.

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