Moody's Investors Service today assigned long-term senior and subordinated debt ratings to the $7.5bn medium-term note programme of Emirates NBD PJSC ('EmiratesNBD') and its special purpose issuing vehicle Emirates NBD Global Funding Limited ('EGF').
Moody's also assigned short-term commercial paper rating to EmiratesNBD's $4.0bn Euro Commercial Paper (ECP) programme, which has been assumed from Emirates Bank International PJSC. Furthermore, Moody's withdrew all legacy ratings on Emirates Bank International PJSC and National Bank of Dubai PJSC - the predecessor companies. The assigned ratings are on review for possible downgrade, as were the legacy ratings.
The assigned ratings are as follows:
Emirates NBD PJSC:
- Senior Unsecured Notes, rated A2 on review for possible downgrade
- Subordinated Notes, rated A3 on review for possible downgrade
- Commercial Paper, rated Prime-1 on review for possible downgrade
Emirates NBD Global Funding Limited (a Cayman Islands registered company, irrevocably and unconditionally guaranteed by EmiratesNBD):
- Senior Unsecured Notes, rated A2 on review for possible downgrade
- Subordinated Notes, rated A3 on review for possible downgrade
EmiratesNBD is the legal successor of the merger between Emirates Bank International PJSC ('EBI') and National Bank of Dubai PJSC ('NBD') and has legally assumed all assets and liabilities of EBI and NBD. Similarly, the outstanding sukuk trust certificates of Emirates Islamic Bank PJSC (issued by EIB Sukuk Company Ltd, incorporated in the Cayman Islands) are now considered guaranteed by EmiratesNBD and will therefore rank pari passu with its other unsecured and unsubordinated obligations; as a result, the ratings on these certificates are affirmed (at A2 on review for possible downgrade).
Moody's assigned deposit ratings to EmiratesNBD on 24 November 2009, following the completion of the IT integration of EBI and NBD into a common platform that was rolled out on 21 November 2009, signifying the integration of EBI and NBD's operations. No debt ratings were assigned at that time as these were reflected in EBI and NBD.
Moody's had decided not to assign any debt ratings to EmiratesNBD at the time, until after the completion of the creditors' statutory period (which ended in February 2010), the automatic dissolution of EBI and NBD and the withdrawal of their ratings. Any future issuances under the medium-term note programme will be made by either EmiratesNBD or EGF, while all future commercial paper issuances will be made by EmiratesNBD.
The withdrawn foreign currency and local currency ratings of Emirates Bank International PJSC and National Bank of Dubai PJSC were as follows:
- Bank Financial Strength, rated D+ on review for possible downgrade
- Long-term Deposits, rated A2 on review for possible downgrade
- Short-term Deposits, rated Prime-1 on review for possible downgrade
- Senior Unsecured Notes, rated A2 on review for possible downgrade
- Subordinated Notes, rated A3 on review for possible downgrade
- Commercial Paper, rated Prime-1 on review for possible downgrade
The last rating action on EmiratesNBD was on 10 December 2009, when Moody's downgraded the bank's BFSR from C- to D+ and the long-term deposit ratings to A2 from A1 and placed them on review for possible further downgrade. The Prime-1 short-term ratings were also placed on review for possible downgrade. The review was prompted by the further deterioration in Dubai's economic environment accentuated by the uncertainties surrounding the restructuring of Dubai World Group (a major conglomerate owned by the Dubai government), which has exerted pressure on the bank's credit quality and external funding accessibility. Moody's expects to complete the review in the next few weeks, as more information on the restructuring becomes available.
EmiratesNBD is incorporated in the emirate of Dubai, the United Arab Emirates and is majority owned by the Dubai government. It is the largest banking institution in the UAE with a market share of around 20% and total assets of Dhs281.6bn ($76.7bn) as of end-December 2009. The bank's financial position and profitability remain strong despite the challenging operating environment conditions in Dubai, which are exerting pressure on the bank's provisioning requirements. At end-December 2009, its regulatory capital adequacy ratio reached 20.8% and its Tier 1 ratio was 13.3%, up from 11.4% and 9.4%, respectively, at end-2008. Its net profits for the year reached Dhs3.3bn ($910m) versus Dhs3.7bn the previous year - even after Dhs3.3bn of loan loss provisions (up from Dhs1.7bn in 2008).
The principal methodologies used in rating the banks were "Bank Financial Strength Ratings: Global Methodology" (February 2007) and "Incorporation of Joint-Default Analysis into Moody's Bank Ratings: A Refined Methodology" (March 2007), which can be found at www.moodys.com in the Rating Methodologies sub-directory under the Research & Ratings tab.
Other methodologies and factors that may have been considered in the process of rating these issuers can also be found in the Rating Methodologies sub-directory on Moody's website.
