Mongolian Mortgage Corp. HFC LLC

Repayment of the significant U.S. dollar bonds coming due in February 2024 will likely ease the funding cost burden to some extent. Currently, MIK's asset yields do not fully cover funding costs, as the company parks more funds in liquid but relatively lower-yielding assets to manage liquidity risk. This may lead to a net loss in 2023. The stable outlook on MIK reflects our view that the company will continue to benefit from very high likelihood of government support, and that it will maintain adequate liquidity for the next 12-18 months. We also anticipate its profitability will recover gradually. We could downgrade MIK if the company's financial situation deteriorates to a vulnerable state and the likelihood of government support drops

...Mongolian Mortgage Corp. HFC LLC (MIK) will prioritize management of liquidity risk. MIK has a significant debt maturity wall with an outstanding balance of about US$222.87 million and US$3.43 million notes due in February and December 2024, respectively. We expect the company to be able to manage the refinancing risk by structuring contracts for its purchased mortgage pools such that they expire slightly earlier than bond maturities. MIK will continue to focus on securing a liquidity buffer. The company may also seek additional funding to cope with any potential liquidity shortfall. We expect a very high likelihood of extraordinary government support, if needed. We base our expectation on MIK's very important role as the only authorized issuer of RMBS in Mongolia. The company will continue to be a key participant of the government-led affordable housing finance program. The government will likely maintain strong influence over MIK's business development, and remain an important shareholder....

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