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Sept 27 (Reuters) - (The following statement was released by the rating agency)
Fitch Ratings has assigned Export Import Bank of Malaysia Berhad's (MEXIM) USD1bn multi-currency sukuk programme, established through EXIM Sukuk Malaysia Berhad, a senior unsecured rating of 'A-'.
Key Rating Drivers
The programme rating is the same as MEXIM's Long-Term Issuer Default Rating (IDR). This is because the sukuk (Islamic bonds) will effectively represent unsecured obligations of the bank, and rank equally with all its other unsecured and unsubordinated obligations.
Parties involved under the sukuk structure would be MEXIM, sukukholders and EXIM Sukuk Malaysia Berhad, a special purpose vehicle (SPV) incorporated solely to facilitate sukuk issues. The SPV will be the issuer of the sukuk. It also acts as the trustee on behalf of the sukukholders via a declaration of trust, whereby the SPV will use the sukuk proceeds to purchase eligible assets from MEXIM. The SPV and MEXIM will enter into a wakala agreement. MEXIM, as an agent, will render certain services, including the management of the underlying assets and periodic distributions.
Periodic distributions will be made to the sukukholders, based on expected returns from the underlying assets. This will be satisfied using returns from the underlying assets and, in a shortfall event, funds that MEXIM (in an agent capacity) may extend to the SPV via a liquidity facility. MEXIM is obliged under a purchase undertaking agreement to acquire the trust assets from the SPV at a price that will cover all final amounts payable to the sukukholders, including the principal. This will occur either on a scheduled maturity date or in a dissolution event. An event of default will be tantamount to a dissolution event, during which the SPV (on behalf of the sukukholders) will have direct recourse against MEXIM on an unsecured basis, for the principal amount and any accrued and unpaid distributions. The transaction documents will be principally governed by English Law.
Any deterioration in the Malaysian sovereign's creditworthiness and ratings or in the government's propensity to support MEXIM would hurt the IDR and hence the programme rating. MEXIM's IDR and Negative Outlook are the same as those of the Malaysian sovereign, reflecting Fitch's belief of a very high probability of extraordinary state support, in the event of need, to the bank.
Fitch stresses that there is no assurance that sukuk issued in the future under the programme will be assigned a rating, or that the rating assigned to a specific sukuk under the programme will have the same rating as the programme rating.
Fitch also stresses that it does not express an opinion on whether the sukuk programme is Shariah-compliant.
MEXIM was established in 1995 and is 99.9%-owned by the Minister of Finance Incorporated. The Federal Lands Commissioner (Incorporated) holds one ordinary share.
For more details on MEXIM's ratings and credit profile, see "Fitch Revises MEXIM's and Maybank's Outlook to Negative; Affirms IDRs", dated 31 July 2013 and MEXIM's credit update, dated 19 October 2012, available at www.fitchratings.com. MEXIM's other ratings are as follows:
- Long-Term IDR 'A-'; Outlook Negative
- Support Rating '1'
- Support Rating Floor 'A-'