Research Update: Mongolian Mortgage Corp. Outlook Revised To Negative On Likely Slow Improvement In Profitability; 'B/B' Ratings Affirmed

The improvement in profitability for Mongolian Mortgage Corp. HFC LLC (MIK) over the next 12 months is likely to be less than we expected. The risk adjusted capital (RAC) ratio of the Mongolia-based issuer of mortgage-backed securities could therefore trend closer to our downgrade threshold of 7%. We revised our outlook on MIK to negative from stable. At the same time, we affirmed our 'B' long-term and 'B' short-term issuer credit ratings on MIK. We also affirmed the 'B' long-term issue rating on the company's senior unsecured notes. The negative outlook reflects our view that MIK will face profitability pressures over the next 12 months. We expect the company to retain its solid market position and maintain its stable funding

...- The improvement in profitability for Mongolian Mortgage Corp. HFC LLC (MIK) over the next 12 months is likely to be less than we expected. - The risk adjusted capital (RAC) ratio of the Mongolia-based issuer of mortgage-backed securities could therefore trend closer to our downgrade threshold of 7%. - We revised our outlook on MIK to negative from stable. At the same time, we affirmed our 'B' long-term and 'B' short-term issuer credit ratings on MIK. We also affirmed the 'B' long-term issue rating on the company's senior unsecured notes. - The negative outlook reflects our view that MIK will face profitability pressures over the next 12 months. We expect the company to retain its solid market position and maintain its stable funding and liquidity profile over the period....

Research Update