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TEXT-S&P rates Axiata Group's sukuk trust certificates 'BBB-'
September 11, 2012 / 7:00 AM / in 5 years

TEXT-S&P rates Axiata Group's sukuk trust certificates 'BBB-'

(The following statement was released by the rating agency)

Sept 11 - Standard & Poor’s Ratings Services today assigned its ‘BBB-’ rating to a proposed issue of benchmark Chinese-renminbi-denominated sukuk trust certificates due 2014 by Axiata Group Bhd. (BBB/Positive/--; axA+/--), a Malaysia-based telecommunications holding company. We also assigned our ‘cnA’ Greater China regional scale rating to the proposed issue. Axiata Group will issue the trust certificates through Axiata SPV2 Bhd., a Malaysia-domiciled special purpose vehicle that Axiata Group set up and wholly owns. The rating on the trust certificates is subject to our review of the final issuance documentation.

The proposed issue is the first drawdown under Axiata Group’s multi-currency US$1.5 billion equivalent sukuk program, which Standard & Poor’s rated ‘BBB-’ on July 19, 2012. The rating on the trust certificates is the same as that on the group’s senior unsecured notes. This is because the obligations to the sukuk holders will rank pari passu with the senior unsecured debt obligations of Axiata Group.

Axiata Group has indicated that it will use the proceeds from the sukuk issuance for general corporate purposes in accordance with the Sharia principle. The sukuk structure is based on the Sharia principle of Wakala. Airtime vouchers (representing an entitlement to a specified number of airtime minutes) from Celcom Axiata Bhd. (not rated) will be used as the trust asset under this issuance. Celcom Axiata is a 100% owned subsidiary of Axiata Group and holds the latter’s Malaysian wireless operations. We believe agreements such as a purchase undertaking and liquidity shortfall coverage oblige Axiata Group to make all payments needed to ensure that the issuer has sufficient funds to pay the certificate holders on time.

RELATED CRITERIA AND RESEARCH

-- Axiata Group Bhd. Sukuk Program Assigned ‘BBB-’ Issue Rating, July 19, 2012

-- 2008 Corporate Criteria: Analytical Methodology, April 15, 2008

-- General Criteria: Standard & Poor’s Approach To Rating Sukuk, Sept. 17, 2007

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