Moody's assigns A1 rating to Emirates Islamic Bank's Sukuk trust certificates

The Sukuk trust certificates will be issued under a USD1 billion Trust Certificate Issuance Programme. Moody's has also assigned a rating of A1 to the first drawdown of senior Sukuk unsecured trust certificates to be issued under the programme. The ratings are subject to a review of the final documentation.

Accordingly, a special purpose entity, EIB Sukuk Company Ltd, (issuer) incorporated in the Cayman Islands, issues Sukuk to investors (Sukuk holders). It uses the proceeds to acquire a co-ownership interest in a portfolio of assets comprising income generating assets (Ijarah-Leased), asset-based Sukuk (trust certificates) and/or units in asset-based funds, held or owned by the bank, with the two parties becoming Co-owners in the Co-ownership Assets (Trust assets). EIB, as managing agent, will collect
all payments from the Co-ownership assets and will pay the issuer an amount sufficient to fund the periodic distribution amount to Sukuk holders on each distribution date. EIB will issue a purchase undertaking in favour of the issuer, wherein it undertakes to purchase the issuer's interest in the Co-ownership Assets at the Exercise price either upon the maturity date or prior to maturity due to a dissolution event.

The A1 rating assigned to the floating rate senior unsecured Sukuk is placed at the same level as the long-term foreign currency deposit and senior unsecured ratings already assigned to EBI, the guarantor, on the premise that EBI has (a) irrevocably undertaken to cover any shortfall
between the payments from the co-owned Ijara/Sukuk assets and the required periodic distribution amount to Sukuk holders; and (b)irrevocably undertaken to purchase the issuer's interest in the Co-ownership assets at the exercise price, either on maturity or on
dissolution, sufficient to pay the Sukuk holders. Given that the obligations of EBI will be direct, unconditional, and unsecured
obligations and will rank at least pari passu with its other unsecured and unsubordinated obligations, the senior Sukuk rating is placed at the same level as EBI's rating.

Moody's points out that the documentation of this issue includes a condition for the government of Dubai continuing to own not less than 51% of the issued share capital of the Guarantor (EBI), and to that effect, the proposed merger with National Bank of Dubai is not expected to lead to a dilution in the government stake beyond the 51% mark.

EBI's foreign currency deposit ratings are set at A1/Prime-1 based on its own strengths as reflected in its C- BFSR, as well as strong likelihood of systemic support from the UAE authorities - given the bank's strong
relationship with the Dubai government -- including its 77% direct ownership and importance in the banking system in the UAE.

Emirates Islamic Bank is a wholly owned subsidiary of Emirates Bank International, which is headquartered in Dubai and had total assets of AED95.9 billion (USD23.4 billion) as at year-end 2006.