Fitch assigns Dubai Electricity and Water Authority Sukuk final 'AA-' rating

The final rating follows the receipt of final documentation.

The Sukuk rating is in line with DEWA's senior unsecured rating of 'AA-' (AA minus).

DEWA is rated Long-term Issuer Default rating (IDR) 'AA-' (AA minus) with Stable Outlook and Short-term IDR 'F1+', both of which were affirmed on 27 May 2008.

The Sukuk was issued by DEWA Funding Limited, which is incorporated in accordance with the laws of the Cayman Islands.

The issue comprises certificates representing an undivided beneficial ownership interest in trust assets.

Principal cash flows will include the payment by the issuer to DEWA as the seller of a package of assets of the issuance amount.

On each periodic distribution date, DEWA will pay to the issuer an amount reflecting the rental due in respect of the lease assets.

Each payment is intended to be sufficient to fund the corresponding distribution amount payable by the issuer under the certificates.

The proceeds from the Sukuk will be utilised by DEWA to fund its capital expenditure programme.

Sukuk covenants include, among other things, limitations on indebtedness and on the issuer's ability to secure any of its present or future indebtedness.

Sukuk investors should be aware that DEWA has by now issued $2bn under a USD4bn securitisation programme ($1bn in August 2007 and $1bn in May 2008).

Pursuant to the securitisation, DEWA has undertaken to assign some utility receivables, which are not available for the purpose of servicing the Sukuk debt.

Fitch understands that DEWA is committed to managing receivables assigned to this programme with a view to minimizing subordination risk for the Sukuk, which is also supported by the expected growth in cash flows on the back of increased volumes and approved tariff increases.

For the Sukuk rating to remain the same as DEWA's Long-term IDR, Fitch would require projected interest coverage based on cash flows available to holders of Sukuk debt to remain comfortably above one time.