OREANDA-NEWS. Fitch Ratings has assigned an 'A+' rating to QIB Sukuk Ltd.'s (QIBSL) USD750m five-year trust certificates. QIBSL is a special purpose vehicle (SPV), incorporated in the Cayman Islands solely to act as the issuer of the certificates and trustee for the holders of the certificates.

KEY RATING DRIVERS
The sukuk rating is driven solely by Qatar Islamic Bank (Q.S.C.)'s (QIB) Issuer Default Rating (IDR) and senior unsecured rating of 'A+'. This reflects Fitch's view that default of these senior unsecured obligations would reflect default of the entity in accordance with Fitch's rating definitions. The rating also takes into account the sukuk's structure and documentation, which includes the following features.

- The trustee will have the right under the purchase undertaking to require QIB to purchase the relevant wakala portfolio on the maturity of a series, or the occurrence of any dissolution event, by way of assignment and transfer. Additionally, and pursuant to the master restricted mudaraba agreement, the relevant restricted mudaraba will be liquidated upon the date of such maturity or dissolution event.

- The exercise price payable by QIB upon exercise of the relevant purchase undertaking and the final liquidation proceeds, will be an amount equal to the aggregate of: (i) an amount equal to the aggregate face amount of certificates then outstanding for the relevant series (ii) an amount equal to any accrued and unpaid periodic distribution amounts (iii) other amount specified in the applicable final terms as being payable upon dissolution of the relevant series.

- Prior to each periodic distribution date, the service agent will pay to the trustee an amount reflecting returns by the relevant portfolio during the relevant distribution period, which is intended to be sufficient to fund the periodic distribution amounts payable. Fitch also notes that other measures can be taken by QIB to ensure that there is no shortfall and that funding and the portfolio income are redeemed in full.

- The payment obligations of QIB (in any capacity) to the trustee under the transaction documents in respect of each series of certificates will be direct, unconditional, unsubordinated and unsecured obligations of QIB and shall, at all times rank at least equally with all other unsecured and unsubordinated monetary obligations of QIB, present and future.

Certain aspects of the transaction will be governed by English law while others will be governed by Qatari law and the laws of the Cayman Islands. Fitch does not express an opinion on whether the relevant transaction documents are enforceable under any applicable law. However Fitch's rating for the certificates reflects the agency's belief that QIB would stand behind its obligations.

Furthermore, by assigning ratings to the programme and certificates to be issued under it, Fitch does not express an opinion on the programme structure's compliance with sharia principles.

The programme includes a negative pledge provision binding QIB, as well as financial reporting obligations, covenants and cross-default clauses. The documentation does not contain a change of control clause.

Fitch has given no consideration to any underlying assets or any collateral provided, as Fitch understands that the issuer's ability to satisfy payments due on the certificates will ultimately depend on QIB satisfying their unsecured payment obligations to the issuer under the transaction documents described in the prospectus.

RATING SENSITIVITIES
The rating of the programme will be influenced by changes in QIB's Long-Term IDR. A downgrade of QIB's IDR would result in a downgrade to QIBSL debt ratings.

QIB's IDRs, Support Rating and Support Rating Floor are potentially sensitive to a change in Fitch's assumptions around the Qatari authorities' propensity or ability to provide timely support to the banking sector. At present Fitch considers the likelihood of any change to be small.