Standards & Poor's Rating Services (S&P) revised Mongolia's outlook to positive from stable and affirmed its nation's sovereign ratings, citing its growth prospects are more mines begin operations. The rating has a crucial influence on the ratings of banking agencies, which accounts for a similar boost to Golomt Bank's rating.

Mongolia’s long-term sovereign rating remains “BB-” and its short-term rating “B”, S&P said. The outlook revision reflects expectations for a “significant” increase in real per capital gross domestic product through at least 2014, with S&P estimating the measure may more than double to $6,560 by 2014 from $2,973 this year, according to the statement. The credit rater also affirmed its ratings of “B+” for long term and “B” for short term for Golomt Bank.  However, the credit rater did not factor support from the government into its rating for Golomt because the bank's “stand-alone credit profile” closely resembles the local currency rating on the Mongolian government.  However, a raise in the sovereign rating would open the possibility for a higher rating for Golomt.

The nation's Mongolian Stock Exchange (MSE) TOP 20 stock index gained 2.8 percent following the report, the biggest one-day increase in months.  S&P said it may raise Mongolia's sovereign rating if its fiscal and external debt metrics continue to improve; or if improvements in fiscal, monetary, and banking sector politics materially reduce vulnerabilities in these areas, S&P said.

The rating may stabilize or come under downward pressure if macroeconomic stability and public finances come under renewed threat from “extravagant” fiscal expansion, or the fiscal cost of intervention from further unexpected banking sector losses, S&P said. Excessive borrowing could also push down the rating as it move would adversely affect Mongolia's favorable debt interests and maturity structure, the firm said. A weak policy environment and its resources-based economy are also acting as constraints on Mongolia's ratings, said S&P.