DUBAI — Moody's Investors Service has assigned a A1 foreign-currency rating to the upcoming sukuk trust certificates of Dubai Islamic Bank.
Moody's rating is subject to review of the final documentation, the terms and conditions of which are not expected to change in any material way from the draft documents reviewed.
Accordingly, a special purpose entity (Issuer), DIB Sukuk Company Ltd, incorporated in the Cayman Islands, will issue sukuk certificates to investors (sukukholders) and will use the proceeds to acquire a co-ownership interest in a portfolio of assets comprising lease and Musharaka assets from DIB, with the two parties becoming co-owners in the co-ownership assets.
DIB, as managing agent, will collect all rental and profit payments from the lease and Musharaka contracts relating to the co-ownership assets and will pay the Issuer an amount sufficient to fund the required periodic distribution amount to sukukholders on each distribution date.
Any excess payments from the co-ownership assets will be paid to DIB as an incentive fee, while any shortfalls will be covered by DIB to ensure the required periodic distribution amount is paid.
DIB 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 a pre-agreed price, either upon maturity date or prior to maturity in the case of a dissolution event. This undertaking is the source of principal repayment