Fitch Assigns MEXIM's Sukuk Final 'A-' Rating

Tue Feb 18, 2014 8:57pm EST

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(The following statement was released by the rating agency) SINGAPORE, February 18 (Fitch) Fitch Ratings has assigned Export Import Bank of Malaysia Berhad's (MEXIM) USD300m 2.874% sukuk due 2019 a final rating of 'A-'. The Islamic bonds are issued under MEXIM's USD1bn multi-currency sukuk programme established through EXIM Sukuk Malaysia Berhad. This follows the completion of the Islamic bond issue and receipt of final documents conforming to information previously received. The final rating is the same as the expected rating assigned on 10 February 2014. KEY RATING DRIVERS The sukuk rating is the same as MEXIM's Long-Term Issuer Default Rating (IDR). This is because the sukuk effectively represents unsecured obligations of the bank, and ranks equally with all its other unsecured and unsubordinated obligations. Parties involved under the sukuk structure are MEXIM, sukukholders and EXIM Sukuk Malaysia Berhad, a special purpose vehicle (SPV) incorporated solely to facilitate sukuk issues. The SPV is the issuer of the sukuk and acts as the trustee on behalf of the sukukholders via a declaration of trust. The SPV will use the sukuk proceeds to purchase eligible assets from MEXIM. The SPV and MEXIM have entered into a wakala agreement, or agency agreement, in which MEXIM 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 achieved using returns from the underlying assets and, in a shortfall event, funds that MEXIM (in the capacity of an agent) 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 document is principally governed by English law while the supplemental purchase agreement is governed by Malaysian law. RATING SENSITIVITIES 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 sukuk 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 to MEXIM's senior creditors, in the event of need. Fitch stresses that it does not express an opinion on whether the sukuk 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 17 January 2014, 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-' Contacts: Primary Analyst Mikho Irawady Associate Director +65 6796 7230 Fitch Ratings Singapore PTE Ltd 6 Temasek Boulevard #35-05 Suntec Tower Four Singapore 038986 Secondary Analyst Ambreesh Srivastava Senior Director +65 6796 7218 Committee Chairperson Mark Young Managing Director +65 6796 7229 Media Relations: Leslie Tan, Singapore, Tel: +65 67 96 7234, Email: leslie.tan@fitchratings.com. Additional information is available at www.fitchratings.com. Applicable Criteria, "Global Financial Institutions Rating Criteria", dated 31 January 2014, and "Rating Sukuk", dated 9 August 2013 are available at www.fitchratings.com. Applicable Criteria and Related Research: Global Financial Institutions Rating Criteria here Rating Sukuk here Additional Disclosure Solicitation Status here ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: here. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.

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