Support-Driven Ratings: Development Bank of Mongolia LLC's (DBM) Issuer Default Ratings (IDRs) are equalised with the IDRs of the Mongolian sovereign. The ratings reflect Fitch Ratings' belief that the state has strong propensity to provide support for the bank, if required. This stems from DBM's policy role, full state ownership and close linkages with the government, such as lending to state-owned companies and state-guaranteed legacy debt. Policy Role to Provide Support: DBM, as the only policy financial institution in Mongolia, has a specific mandate to finance projects in important sectors that support the economy as per the Development Bank of Mongolia Act. DBM is facilitating some of the government's support measures during the Covid-19 pandemic by providing low interest-rate loans to the country's important sectors, such as cashmere manufacturers, agriculture and utilities, and participating in large-scale domestic development projects. Strategic State Ownership: The Mongolian government remains the sole shareholder and the Ministry of Finance chairs the bank's board, overseeing DBM's operations. Fitch considers the state's 100% ownership of the bank as strategic in light of DBM's policy role. The DBM act indicates the government's power to take measures to ensure the sustainability of DBM's finances and solvency. We believe various forms of support from the government for DBM will be available if needed.

Published Date:2021-08-19