/ Nov 06, 2008

Trade and Development Bank becomes the first bank in Mongolia to receive Moody’s commercial bank rating

Moody’s Investors Service is one of the three major international credit ratings agencies. It has been founded by John Moody in 1900. Moody’s has offices in 22 countries worldwide and over 1000 analysts covering every industry, government level as well as structured and infrastructure finance. Moody's publishes investor-oriented credit research, including in-depth research on major debt issuers, industry studies, special comments and credit opinion handbooks. Moody’s issues ratings for more that 100 sovereign nations, 11,000 company issuers, 25,000 public finance issuers and 70,000 structured finance obligations.

The reason of obtaining such a risk ratings is:

  • facilitates wider access to the global capital market
  • assists with diversification of investors base, thus enhancing ability in raising capital
  • enhances financing flexibility

Users of Credit Ratings are Investors (including banks and other financial institutions, institutional investors etc.), Issuers, Intermediaries and Regulators.

Moody’s Bank Ratings

Moody’s typically assigns a Bank deposit Rating and a Bank issuer Rating to a bank.

  • Bank deposit Rating – A bank’s ability to repay punctually its domestic currency deposit obligations.

    The rating assigned for TDB is Ba2.
  • Bank issuer Rating – A bank’s ability to honor senior unsecured financial obligations and contracts.

    The rating assigned for TDB is Ba2.

Seven Pillars of Bank Analysis

  • Operating Environment
  • Ownership and Governance
  • Management Priorities and Strategies
  • Franchise Value
  • Recurring Earning Power
  • Risk Profile
  • Economic Capital Analysis

What it means for Trade and Development Bank of Mongolia :

Being a strong and trustworthy financial institution requires good partnership and cooperation not only with local counterparts but also with organizations around the world. Therefore we want to make sure that our international counterparts, partners, investors and clients have the most up-to date and credible view of our bank’s creditworthiness. International rating such as from Moody’s provide this answer. The ratings would allow the bank to:

  • improve relationships with our counterparts as more and more international organizations are being prohibited and/or limited under their own risk and internal regulations to do business with unrated organizations; also this will allow us to better negotiate pricing and other terms of credit lines and other financing options
  • efficiently access international debt capital and syndicated loan markets, which is an important element that would help us diversify our funding
  • benchmark our performance against our peers and the global banking sector
  • clarify strategic issues and factors that affect the credit quality of our organization, so that we can work on those areas, and maintain and further strengthen our leadership in the local market, and establish our presence in the international / regional markets.

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