Fitch says RWN placed on Mongolia’s only policy bank DBM may take more than six months to resolve

By bne IntelliNews December 3, 2023

Fitch Ratings said on November 30 that the rating watch negative (RWN) it placed on Development Bank of Mongolia’s (DBM’s) Long-Term Issuer Default Ratings (IDRs) and Government Support Rating (GSR) in October may take more than six months to resolve.

The resolution of the RWN on DBM—the only policy bank in Mongolia and 100%-owned by the government—“may take more than six months as the settlement of refinance risks from its maturing foreign-currency senior debt in 2023, potentially with state resources, would not fully address the questions around the degree of the bank’s importance to the government”, said Fitch.

It added: “Once the RWN is resolved, DBM's ratings could remain unchanged or be downgraded.”

Since early 2022, DBM has been focusing on refinancing and resolving non-performing loans (NPLs) on its balance sheet, said the rating firm, noting: “This has left the bank with a limited capacity to carry out its policy roles as evident from the lack of new loans granted. We have also not seen sufficient direct state support for the bank that would allow it to carry out its usual policy function of lending.”

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