Fitch Rates HSBC Bank Middle East $5bn trust certificate programme 'AA-'

The rating reflects Fitch's judgement that the obligations of HBME with respect to trust certificates issued under this programme can be considered as unconditional, unsubordinated obligations of the bank, ranking pari passu with its other senior unsecured obligations. The programme's rating is therefore in line with HBME's Long-term IDR.

The 'AA-' rating is for the programme and Fitch notes that each individual issue under the programme may not carry the applicable programme rating. Ratings for individual issues will be assigned on a case-by-case basis subject to the terms and conditions of each issue.

Under the programme, HBME will sell Shari'ah-compliant assets to HBME Sukuk Company Limited, which will then issue trust certificates and make periodic distributions to certificate holders from income generated by the assets.

HBME Sukuk Company Limited is an exempted limited company incorporated in the Cayman Islands whose sole purpose is to participate in these transactions. Under the structure, HBME undertakes to repurchase the assets on maturity of the certificates or any other dissolution event (including default), and as managing agent is required to ensure provision of sufficient funds for payment of the periodic distributions.

HBME is 100% owned by HSBC Holdings ('AA'/Negative Outlook) and is HSBC Group's main vehicle for its Gulf/Middle Eastern operations, with 45 branches across the Middle East. Its business is focused mainly on the UAE but it also has operations in Qatar, Bahrain, Kuwait, Oman, Jordan, Lebanon, Pakistan and the Palestinian Territories.