Mongolia's proposed Chinese Renminbi Notes rated 'B+' by S&P

HONG KONG - Standard & Poor's has assigned its 'B+' long-term issue rating to the Chinese renminbi-denominated global notes that Mongolia (B+/Negative/B) proposes to issue as part of its US$5 billion global medium-term notes programme. S&P also assigned its 'cnBB-' long-term Greater China regional scale rating to the proposed notes.

S&P says the notes will constitute direct, unconditional, unsubordinated, and unsecured obligations of Mongolia. It expects the Mongolian Government to use most of the proceeds to refinance existing debt.

“The ratings on Mongolia reflect the country's underdeveloped, resource-driven economy and its weak policy environment,”S&P says. “The economy's strong medium-term growth prospects and moderate general Government debt temper these weaknesses.”

S&P says could lower its rating on Mongolia in the next 12 months if the Government's Comprehensive Macroeconomic Adjustment Plan does not inducemmuch-needed foreign direct investment, if the country's external liquidity continues to weaken, or the Government debt burden rises.

“We may revise our outlook back to stable if the Government can realise the substantial mineral wealth of the nation and improve its fiscal and external positions beyond our current expectations,” the agency adds. www.standardandpoors.com (ATI).