HONG KONG (Standard & Poor's) July 2, 2014--Standard & Poor's Ratings Services today affirmed its 'B' long-term and 'B' short-term issue ratings to a proposed medium-term notes (MTN) program under which Trade and Development Bank of Mongolia LLC (TDB; B/Negative/B) may issue notes up to a maximum of US$1 billion. We also affirmed our 'B' long-term issue rating assigned to a proposed drawdown under the program on the same date. All the ratings, which we assigned on June 17, 2014, are still subject to our review of the final issuance documentation.
Our rating affirmations follow our review of the program's recently updated terms and conditions. We note that the program and the drawdown are no longer backed by a letter of support (LoS) from the Mongolian government, acting through the Ministry of Finance. Nonetheless, the absence of a LoS does not have any major rating implication on the issue ratings. That's because we do not view the letter as a guarantee and therefore have not equalized the long-term issue rating on the MTN program with the sovereign credit rating on Mongolia (B+/Stable/B). (See "Trade And Development Bank of Mongolia's
Proposed US$1 Billion MTN Program And Proposed Drawdown Assigned 'B' Ratings," published on RatingsDirect on June 17, 2014.)
We have equalized the issue ratings on the proposed MTN program and drawdown with the issuer credit ratings on TDB. All notes issued under the program will rank equally among themselves and with all other present and future unsecured and unsubordinated obligations of the bank, except obligations required to be preferred by law. TDB intends to use the bond proceeds for the bank's general corporate purpose and refinancing of foreign-currency denominated debt.
TDB may issue index-linked notes under the program. Under Standard & Poor's criteria, we do not rate bonds if principal payments are linked to fluctuations in equity or commodity prices, or equity or commodity indices.