Mubasher: Moody's Investors Service on Monday announced that it assigned the rating of provisional (P)A2 senior unsecured long term, in both foreign and local currency, to Qatar International Islamic Bank’s (QIIB) $2 billion trust certificates program “QIIB Senior Sukuk Limited”.
QIIB Senior Sukuk Limited is a special purpose vehicle incorporated in the Cayman Islands by QIIB, which Moody’s previously assigned an ‘A2’ issuer rating with a negative outlook, according to a press release.
The sukuk certificate holders will effectively be exposed to QIIB's senior unsecured credit risk, Moody’s explained, adding that they will neither be exposed to the performance risk of the sukuk assets nor have any preferential claim or recourse over the sukuk assets, or rights to cause any disposition of such assets except as expressly provided under the transaction documents.
The holders “will only have rights against QIIB, ranking pari passu with other senior unsecured obligations as provided in the transaction documents,” the agency continued.
“The proceeds of the sukuk certificates will be used by the Issuer to acquire a beneficial interest in a portfolio of Shari'ah compliant assets. These sukuk assets will form part of 'Wakala' and 'Mudaraba' portfolios which will be managed by QIIB as Servicing Agent and 'Mudarib', respectively,” Moody’s said.
QIIB will collect income against the periodic distribution amounts, the ratings agency said, noting that in the event that there is a shortfall between the amounts collected and the aggregate amounts due, then the Qatari bank, as Servicing Agent, will pay further amounts to avoid a dissolution event.
“However, a failure to pay such amounts would lead to a payment default,” Moody’s warned.
Moody's programme rating does not express an opinion on the structure's compliance with Shari'ah law, the agency clarified, noting that these ratings only represent Moody's preliminary credit opinion.
Headquartered in Doha, QIIB last reported total consolidated assets of QAR 46 billion (around $13 billion) as at June 2017.