MONGOLIA BOND YIELDS AT FOUR-MONTH TOP AS MOODY’S CUTS BANKS

Mongolia’s borrowing costs rose to near a four-month high as Moody’s Investors Service joined Fitch Ratings Ltd. in downgrading the ratings outlooks for some of the country’s banks.
Yields on the North Asian country’s dollar notes due in 2022 climbed to 7.96 percent today, close to the Jan. 6 level of 7.962 percent, which was the highest since Sept. 17, according to prices compiled by Bloomberg. The country’s debt, including corporate securities, fell to 99.01 on Jan. 6, the lowest since Dec. 10, according to JPMorgan Chase & Co. indexes.
The ratings outlooks of Khan Bank LLC, Trade & Development Bank of Mongolia LLC and XacBank LLC were demoted to negative from stable, because of the negative impact of the global commodity-market slowdown, according to a Moody’s report today. The nation’s economic growth decelerated to 11.3 percent in the first half of 2013 on reduced Chinese demand for its coal, after an expansion of 12.4 percent in 2012.
“Given the resource-based nature of the economy and a large lending concentration in mining, there is the risk of boom-bust cycles, resulting in a volatile operating environment,” said Hyun Hee Park, an analyst at Moody’s. “The system’s non-performing loans ratio only rose to 5.3 percent at the end of November 2013 from 4.2 percent at the end of 2012.”
Khan Bank is the nation’s biggest lender, while Trade & Development Bank has the second-largest loan portfolio, according to the report.
Trade & Development Bank is considering an offshore yuan bond sale, according to a person familiar with the matter, who asked not to be identified because the matter is private. The bank is starting on a series of fixed-income meetings from tomorrow, the person said.
Fitch revised the outlook of Khan Bank and XacBank LLC to negative from stable last month.
To contact the reporter on this story: Tanya Angerer in Singapore at tangerer@bloomberg.net
To contact the editor responsible for this story: Katrina Nicholas at knicholas2@bloomberg.net
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