The preliminary rating reflects information and legal opinion available as of May 25, 2007. Subsequent information and legal opinion may result in the assignment of a final rating that differs from the preliminary rating.
Under the transaction, Dubai Sukuk Centre Ltd. will issue floating-rate trust certificates (sukuk al-mudaraba). The rating on the certificates reflects, and is fully reliant on, the rating on DIFC Investments LLC (A+/Stable/A-1). The equalization of the ratings is based on the obligation of DIFC Investments LLC to pay to the issuer amounts that are sufficient to enable the issuer to make all due payments to the certificate holders on a timely basis, including periodic distribution amounts and redemption of the principal amount.
Dubai Sukuk Centre Ltd. is a special-purpose entity established for this transaction. The rationale for the transaction structure is to allow DIFC Investments LLC to raise funds under terms that are compliant with Sharia (Islamic principles).
The proceeds of the certificates issue will be used to fund a mudaraba arrangement between Dubai Sukuk Centre Ltd. and DIFC Investments LLC. Periodic payments to the certificate holders will be funded by the profits distributed under the mudaraba agreement and--to the extent these profits are insufficient to ensure full and timely payment to the certificate holders--by sufficient complementary Sharia-compliant funds provided by DIFC Investments LLC to the issuer. The principal repayment will be made from DIFC Investments LLC's payment obligation vis-à-vis the issuer under a purchase undertaking. The credit risk on the certificates is therefore equivalent to that of DIFC Investments LLC.
DIFC Investments LLC manages the Dubai International Financial Centre's (DIFC) revenue-generating operations. DIFC itself is the vehicle through which Dubai proposes to position itself as a regional and world financial hub. The ratings on DIFC Investments LLC are supported first and foremost by the strong, ongoing backing of the government of Dubai for the DIFC project.
There is no explicit government guarantee on DIFC debt: The law governing DIFC states that the government is not liable for obligations arising from the centre's activities. However, the strategic and symbolic importance and high public profile of DIFC, coupled with its operational closeness to the Ruler and Dubai's financial strength, lead Standard & Poor's to conclude that the government could and would intervene if DIFC Investments LLC were to face financial difficulties.
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Dubai Sukuk Centre Ltd.'s trust certificates due 2012 assigned 'A+' preliminary rating
- United Arab Emirates: Tuesday, May 29 - 2007 at 13:18
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Standard & Poor's Ratings Services said that it had assigned its 'A+' preliminary credit rating to the floating-rate trust certificates due 2012 to be issued by Dubai Sukuk Centre Ltd.
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Posted by Lara Lynn Golden, News EditorTuesday, May 29 - 2007 at 13:18 UAE local time (GMT+4)
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Standard & Poor's, a division of The McGraw-Hill Companies (NYSE:MHP), is the world's foremost provider of financial market intelligence, including independent credit ratings, indices, risk evaluation, investment research and data. With approximately 8,500 employees, including wholly owned affiliates, located in 21 countries. Standard & Poor's is an essential part of the world's financial infrastructure and has played a leading role for more than 140 years in providing investors with the independent benchmarks they need to feel more confident about their investment and financial decisions.
Christian Esters, CFA, Frankfurt
Ben Faulks, London
Sovereign Ratings
Press Office Contacts:
London Media Hotline: +44 20 7176 3605
Paris: +33 1 44 20 6740
Frankfurt: +49 69 33999 225
Milan: +39 02 72 111 245
Madrid: +34 91 389 6944
Moscow: +7 495 783 4017
Stockholm: +46 8 440 5916
Standard & Poor's, a division of The McGraw-Hill Companies (NYSE:MHP), is the world's foremost provider of financial market intelligence, including independent credit ratings, indices, risk evaluation, investment research and data. With approximately 8,500 employees, including wholly owned affiliates, located in 21 countries. Standard & Poor's is an essential part of the world's financial infrastructure and has played a leading role for more than 140 years in providing investors with the independent benchmarks they need to feel more confident about their investment and financial decisions.
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