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Mongolia takes spotlight amid stable credit ratings in Asia-Pacific

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Mongolia takes spotlight amid stable credit ratings in Asia-Pacific

Thesovereign credit ratings of Asia-Pacific countries remained relatively stablein the first three quarters of 2016, with Mongolia the most notable exception,as its credit ratings moved deeper into junk status amid increasing debt and adepreciating currency.

Mongolia'scentral bank shocked markets in August when it the policy rate by 4.5 percentagepoints to 15% to bolster the country's currency against the U.S. dollar. Thetugrik's depreciating exchange rate had alarmed the government, which was alsodealing with a debt level projected to reach 78% of GDP in 2016.

S&PGlobal Ratings lowered Mongolia's long-term sovereign credit rating toB- from B, as weak export and investment inflows will continue to pressure thecountry's already weak public finances. Thegovernment's fiscal deficit is also expected to increase going forward.

FollowingS&P's action, Moody's downgraded Mongolia's sovereign rating to B3 from B2 andplaced the rating on review for further downgrade. It cited the sharpdeterioration in the country's fiscal metrics, weak growth and very low foreignexchange buffers as reasons behind the downgrade.

Inanother notable ratings action, S&P upgraded South Korea's long-term sovereign credit ratingto AA from AA- to reflect the country's strong record of steady growth. Therating agency also noted that the Bank of Korea's accommodative monetary policyprovided strong support to the country's economic growth.

S&P Global Ratings andS&P Global Market Intelligence are owned by S&P Global Inc.

Click here and select a country from the left navigation bar to view sovereign ratings and other country level information.

Click here for more stories on Asia-Pacific banks and here to set real-time alerts for such data-driven articles. In Step 2, select Banking under the "Data Dispatch Asia-Pacific" section.