Hong Kong, January 18, 2021 -- Moody's Investors Service has assigned a B3 rating to Mongolian Mortgage Corporation HFC LLC's (MIK) proposed USD-denominated senior unsecured debt. The final amounts and terms of the debt will depend on market conditions and on the result of a cash tender offer.

The proposed senior unsecured debt is guaranteed by MIK's parent company, MIK Holding JSC.

The proceeds will be used to finance MIK's cash tender offer to repurchase its outstanding senior unsecured debt maturing in January 2022, to repay any remaining outstanding debt and for general corporate purposes.

The rating on the securities is subject to the receipt of final documentation, the terms and conditions of which are not expected to change in any material way from the draft documents that Moody's has reviewed. Should issuance conditions and/or final documentation deviate from the original ones submitted and reviewed by the rating agency, Moody's will assess the impact that these differences may have on the ratings and act accordingly.

The entity-level outlook on MIK remains negative.

RATINGS RATIONALE

The B3 rating is in line with MIK's long-term foreign currency issuer rating, as the senior unsecured bonds will constitute a direct, general, unsubordinated, unconditional and unsecured obligation of the issuer. The bonds will be redeemable at principal on maturity.

On 14 January, in addition to issuance of the new senior unsecured debt, MIK also announced a tender offer on its $300 million 9.75% senior unsecured notes maturing in January 2022 at 102% of the debt's principal, in addition to accrued interest.

FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATING

WHAT COULD CHANGE THE RATING UP

Given that MIK's B3 ratings are the same as Mongolia's sovereign issuer rating, an upgrade of the company's ratings is unlikely. Moody's could change the outlook on MIK to stable from negative if (1) the outlook on the sovereign rating is changed to stable from negative, (2) the banking system's operating environment remains broadly stable, and (3) the company maintains sound financial metrics.

WHAT COULD CHANGE THE RATING DOWN

Moody's could downgrade MIK's ratings if (1) its standalone assessment is lowered, (2) the risks in Mongolia's banking system rise materially, and/or (3) the sovereign rating is downgraded. Moody's could lower MIK's standalone assessment if (1) the company's liquidity profile relative to its foreign currency debt servicing weakens substantially, and/or (2) the asset quality of Mongolia's mortgage loans deteriorate materially.

The principal methodology used in this rating was Finance Companies Methodology published in November 2019 and available at https://www.moodys.com/researchdocumentcontentpage.aspx.... Alternatively, please see the Rating Methodologies page on www.moodys.com for a copy of this methodology.

Mongolian Mortgage Corporation HFC LLC (MIK) is a wholly owned subsidiary of MIK Holding JSC, which is headquartered in Ulaanbaatar. MIK Holding JSC's consolidated assets totaled MNT4.18 trillion ($1.5 billion) as of 31 December 2019.

REGULATORY DISCLOSURES

For further specification of Moody's key rating assumptions and sensitivity analysis, see the sections Methodology Assumptions and Sensitivity to Assumptions in the disclosure form. Moody's Rating Symbols and Definitions can be found at: https://www.moodys.com/researchdocumentcontentpage.aspx....

For ratings issued on a program, series, category/class of debt or security this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series, category/class of debt, security or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody's rating practices. For ratings issued on a support provider, this announcement provides certain regulatory disclosures in relation to the credit rating action on the support provider and in relation to each particular credit rating action for securities that derive their credit ratings from the support provider's credit rating. For provisional ratings, this announcement provides certain regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.

For any affected securities or rated entities receiving direct credit support from the primary entity(ies) of this credit rating action, and whose ratings may change as a result of this credit rating action, the associated regulatory disclosures will be those of the guarantor entity. Exceptions to this approach exist for the following disclosures, if applicable to jurisdiction: Ancillary Services, Disclosure to rated entity, Disclosure from rated entity.

The rating has been disclosed to the rated entity or its designated agent(s) and issued with no amendment resulting from that disclosure.

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Regulatory disclosures contained in this press release apply to the credit rating and, if applicable, the related rating outlook or rating review.

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The Global Scale Credit Rating on this Credit Rating Announcement was issued by one of Moody's affiliates outside the EU and is endorsed by Moody's Deutschland GmbH, An der Welle 5, Frankfurt am Main 60322, Germany, in accordance with Art.4 paragraph 3 of the Regulation (EC) No 1060/2009 on Credit Rating Agencies. Further information on the EU endorsement status and on the Moody's office that issued the credit rating is available on www.moodys.com.

The Global Scale Credit Rating on this Credit Rating Announcement was issued by one of Moody's affiliates outside the UK and is endorsed by Moody's Investors Service Limited, One Canada Square, Canary Wharf, London E14 5FA under the law applicable to credit rating agencies in the UK. Further information on the UK endorsement status and on the Moody's office that issued the credit rating is available on www.moodys.com.

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The first name below is the lead rating analyst for this Credit Rating and the last name below is the person primarily responsible for approving this Credit Rating.

Tae Jong Ok

Asst Vice President - Analyst

Financial Institutions Group

Moody's Investors Service Hong Kong Ltd.

24/F One Pacific Place

88 Queensway

Hong Kong

China (Hong Kong S.A.R.)

JOURNALISTS: 852 3758 1350

Client Service: 852 3551 3077

Sophia Lee, CFA

Associate Managing Director

Financial Institutions Group

JOURNALISTS: 852 3758 1350

Client Service: 852 3551 3077

Releasing Office:

Moody's Investors Service Hong Kong Ltd.

24/F One Pacific Place

88 Queensway

Hong Kong

China (Hong Kong S.A.R.)

JOURNALISTS: 852 3758 1350

Client Service: 852 3551 3077