Moody's: Ratings on NBD's debt likely to remain unchanged on substitution of EBI as debtor

This is subject to review of the final conditions to be added to the original terms of the debt.

EBI and NBD legally merged on 16 October 2007. The merger was effected through the ncorporation of Emirates NBD P.J.S.C. (Emirates NBD) to serve as the holding company, which currently wholly owns both EBI and NBD.

Emirates NBD is now the largest listed banking entity in the Middle East. The Government of Dubai currently holds 55.64% of its shares. Moody's assigns A1 and Prime-1 long-term and short-term ratings to both EBI and NBD, with a stable outlook. At present, Emirates NBD is not rated.

While EBI and NBD continue to function largely as separate operating companies at the moment, they will ultimately be integrated. This integration is expected to be completed during 2009. As part of this integration process, NBD will seek the consent of the holders of its outstanding notes to substitute EBI in place of NBD as debtor under the notes thereby releasing NBD from all its obligations in respect of these notes. NBD has an EMTN Programme under which three series of notes are outstanding:

1) $750m Floating Rate Notes due 2010 rated A1

2) $500m Floating Rate Notes due 2012 rated A1

3) $500 Subordinated Step-Up Floating Rate Notes due 2016 (callable 2011) rated A2

The ratings on all affected notes carry a stable outlook.

Should noteholders give their consent to the substitution, Moody's will consider NBD released from its obligations under the Programme and these obligations will become EBI's. The ratings on the notes will not be affected as both entities have the same ratings.

As a matter of reference, NBD is simultaneously seeking the consent of noteholders to insert a substitution provision into its terms and conditions to undertake further integration, at a later date, by which EBI may be further substituted as debtor under the notes with any group company of EBI, if needed. Such substitution would be subject to certain conditions, including the confirmation that the substitution would not cause a downgrade in the rating of the notes.

Moody's reiterates its view that it considers the merger of NBD and EBI as positive in the long term, and that it closely monitors the progress of the merger to assess possible changes on the ratings of the surviving entity.

Headquartered in Dubai, United Arab Emirates, Emirates NBD reported total assets of Dhs277bn ($75.5bn) as at 31 March 2008.