Bangkok--6 Jun--Moody's Investors Service Moody's Investors Service today affirmed its Ba2 ratings to Trade and Development Bank of Mongolia's (TDBM) senior and subordinated notes in its foreign currency Euro Medium Term Notes Programme (Programme) based on its proposal to upsize the Programme to USD300m from USD150m. Meanwhile, Moody's assigned Ba2 rating to the lower-tier II subordinated notes (LT2), a newly-added instrument in the Programme. The outlook for all ratings is stable. The senior notes to be issued under the Programme represent direct, unconditional, unsecured, unsubordinated obligations of TDBM. They are rated Ba2, which is one notch below the local currency issuer rating at Ba1 and constrained by the bank's foreign-currency issuer rating. TDBM made the first drawdown of USD75m senior notes in early 2007. The subordinated notes contained in the Programme represent unsecured and subordinated obligations of TDBM. The sub-debt and lower tier II instruments have similar characteristics. As such, they are rated Ba2, one notch lower than TDBM's senior obligations rating of Ba1. TDBM is rated Ba1/NP for long-term/short-term local currency deposits, B2/NP for long-term/short-term foreign currency deposits, and Ba1 and Ba2 for its local and foreign currency debt. The bank carries a bank financial strength rating of D-. The outlook for all these ratings is stable. "TDBM's ratings reflect its dominant position in the domestic corporate banking market, strong profitability, experienced management team, and improving asset quality," notes Cherry Huang, a Moody's Vice President. "However, the rating is offset by the bank's rapid growth and exposure to volatile commodities trading. The rating also reflects the transition period during the shareholding changes and management reshuffle in 2006-2007," she adds. Issuance under the Programme would help diversify TDBM's funding source and support future loan growth. On the other hand, the growth in the bank's risk-weighted-assets is much faster than its internal capital formation. Continuous rapid growth of its business may necessitate a further capital supplement. Lagging in replenishing capital in pursuit of high growth may warrant a rating review. Meanwhile, TDBM's liquidity profile may become less favorable than before as it increasingly relies on confidence-sensitive market funds. Moody's considers deposits a relatively more stable source of funding than market funds. Significant deterioration in liquidity position may also warrant a rating review. The ratings of the Programme are contingent upon the final terms and conditions for the Programme upsize and subordination structure not showing any significant difference from those already reviewed by Moody's. TDBM is headquartered in Ulaanbaatar, Mongolia. It reported assets of MNT 563.5 billion (approximately USD 482 million) at December 2007. Moody's Investors Service is a publisher of rating opinions and research. It is not involved in the offering or sale of any securities, nor is itacting on behalf of the offering party. This release is not a solicitation or a recommendation to buy, hold or sell securities. Taipei Cherry Huang, CFA Vice President - Senior Analyst Financial Institutions Group Moody's Taiwan Corporation Telephone: 886-2-2757-7125 Facsimile: 886-2-2757-7129 Beijing Laurie Cang Vice President - Senior Analyst Financial Institutions Group Moody's Beijing Telephone:+86-10 6642 8968