Moody's Investors Service has assigned a provisional (P)A3 rating to the Sukuk Trust Certificates due 2013 to be issued by Tamweel Sukuk Limited. The rating outlook is stable. The amount of Sukuk to be issued is not yet determined. The Sukuk will be issued in UAE dirhams.
Moody's said that Tamweel Sukuk Limited (TSL) is a special-purpose entity, incorporated in the Cayman Islands and created to issue Sukuk Trust Certificates to investors and use the proceeds to acquire a pool of Shari'ah-compliant assets from mortgage finance company Tamweel, as asset originator and seller. TSL, as trustee, will acquire the assets in the trust. As service agent, Tamweel controls the Trust's operations and, as obligor, Tamweel also provides credit and liquidity support to the Trust.
The certificates' (P)A3 rating and stable outlook are based on the current A3/Prime-2 issuer ratings and stable outlook of Tamweel, assigned in November 2007. This reflects Moody's opinion that the trust certificates rank equally with all other senior unsecured obligations of Tamweel.
Certificate holders are effectively exposed to Tamweel senior credit risk, through Tamweel's control of the trust's assets, through its optional commitment to fund any shortfalls in periodic distribution amounts, under the service agency agreement, and through its obligation to pay the purchase and sale price under the purchase undertaking agreement. Under the agreements, certificate holders have no rights to cause any sale or disposition of the trust's assets except as expressly provided under the purchase undertaking and sale undertaking deeds.
Moody's understands that the trust may be dissolved either at maturity or earlier if any of a number of specified dissolution events occurs. The holders also have the benefit of an investor put right, which would be triggered if there is a downgrade of Tamweel's long-term rating by at least two notches as a direct result of the government of dubai reducing its direct or indirect ownership of the issued share capital of Tamweel.
Moody's said it does not express an opinion on the structure's compliance with Shari'ah law. In that regard, it notes that Tamweel has already received an opinion from a Shari'ah supervisory board that the transaction is Shari'ah compliant. The trust certificates, and the various underlying legal agreements, are governed by English law, the laws of Dubai and the UAE, as well as the laws of the Cayman Islands.
Tamweel is a mortgage finance company headquartered in Dubai and reported total assets of $2.3 billion at 31 December 2007.
