Fitch Rates Senaat's Upcoming Sukuk 'A(EXP)'

Transcription

1. 11 /22/2018 [ Press Release ] Fitch Rates Senaat's Upcoming Sukuk 'A(EXP)' Fitch Rates Senaat's Upcoming Sukuk 'A(EXP)' Fitch Ratings-Milan/London-21 November 2018: Fitch Ratings has assigned General Holding Corporation PJSC's (Senaat) sukuk trust certificates issued through Senaat Sukuk Limited (SSL) an expected rating of 'A(EXP)'. The expected rating is in line with Senaat's Long-Term Issuer Default Rating (IDR) of 'A'. The final sukuk rating is reliant on the successful issuance of the Sukuk and using the proceeds to repay the senior secured debt at the subsidiaries' level. The assignment of the final rating is also contingent on the receipt of final issuance documents materially conforming to information already reviewed. If the Sukuk is not issued, or is issued under materially different terms than we have assumed, Fitch would review the rating. SSL is the issuer of the certificates and trustee. The trustee is an exempted company with limited liability incorporated in the Cayman Islands and has been established for the sole purpose of issuing the certificates and its shares are held by Maples FS Limited as share trustee. KEY RATING DRIVERS The sukuk rating is driven by Senaat's IDR (for Senaat's Key Ratings Drivers see 'Fitch Assigns Senaat First-Time 'A' IDR; Stable Outlook; Senior Unsecured Debt 'A(EXP)'' dated 19 November 2018 at www.fitchratings.com). This is because a default of these senior unsecured obligations would reflect a default of Senaat in accordance with Fitch's rating definitions. Fitch has not considered any underlying assets or collateral provided, as we believe the issuer's ability to satisfy payments due on the certificates will ultimately depend on Senaat satisfying its unsecured payment obligations to the issuer under the transaction documents described in the prospectus and other supplementary documents. In addition to Senaat's propensity to ensure repayment of SSL, Fitch believes it would also be required to ensure full and timely repayment of SSL's sukuk obligations, due to its role and obligations under the sukuk structure and documentation, especially but not limited to the features below: - Senaat as a servicing agent will ensure the timely receipt and recording of all rental and/or murabaha profit instalment payments and also applying these amounts to the payment into the transaction account, which is intended to be sufficient to fund the periodic distribution amount payable under the certificates. - On the business day prior to the relevant scheduled dissolution date in relation to each series, the trustee will have the right to require Senaat to purchase the applicable portion of the trustee's interests, rights, title, benefits and entitlements in, to and under the lease assets; and the applicable portion of the aggregate amounts of the deferred sale price then outstanding, if any, will become immediately due and payable. - The exercise price payable by Senaat to the trustee and the aggregate amounts of the deferred sale price then outstanding, are intended to fund the dissolution amount payable by the trustee under the certificates, which should equal: a) the aggregate face amount of certificates then outstanding on the relevant dissolution date for the relevant series; b) plus all related accrued but unpaid periodic https://www.fitchratings.com/site/pr/10052992 1/5
2. 11 /22/2018 [ Press Release ] Fitch Rates Senaat's Upcoming Sukuk 'A(EXP)' distribution amounts (if any); c) plus an amount representing any amounts payable by SSL (in any capacity) under the transaction; d) less the aggregate amounts of deferred sale price then outstanding, on the relevant dissolution date. - In addition, Senaat will be required to pay any total loss shortfall amount if a total loss event has occurred. - The payment obligations of Senaat (acting in any capacity) under the transaction documents will be direct, unconditional, unsubordinated and unsecured obligations of the obligor which at all times rank at least pari passu with all its other unsecured and unsubordinated obligations. - The sukuk issuance includes negative pledge provision, as well as financial reporting obligations, Senaat event, change of control and cross-default terminology. DERIVATION SUMMARY For Senaat's Derivation Summary see 'Fitch Assigns Senaat First-Time 'A' IDR; Stable Outlook; Senior Unsecured Debt 'A(EXP)'' dated 19 November 2018 at www.fitchratings.com. Certain aspects of the transaction will be governed by English law, while other aspects will be governed by the laws of the UAE and 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 on the certificates reflects its belief that Senaat would stand behind its obligations. When assigning ratings to the sukuk issuance, Fitch does not express an opinion on its compliance with sharia principles. KEY ASSUMPTIONS For Senaat's key assumptions see 'Fitch Assigns Senaat First-Time 'A' IDR; Stable Outlook; Senior Unsecured Debt 'A(EXP)'' dated 19 November 2018 at www.fitchratings.com. RATING SENSITIVITIES Developments that May, Individually or Collectively, Lead to Positive Rating Action - Positive rating action on Abu Dhabi - Strengthening link with the government for example in the form of explicit guarantee Developments that May, Individually or Collectively, Lead to Negative Rating Action - Negative rating action on Abu Dhabi - Weakening links with the government such as the government abandoning its policy of diversifying away from hydrocarbons, reducing oversight over Senaat or diluting its ownership of Senaat; alternatively, Senaat no longer being recognised as one of the six most strategic state controlled holding companies of the Abu Dhabi government, - A weakening of Senaat's ability to service debt through dividend upstreaming, divestment of stakes from its portfolio of companies, impairing its ability to attract debt refinancing and the government failing to step in to support Senaat Sukuk - The rating is sensitive to changes in Senaat's 'A' IDR and to the role and obligations of Senaat under the sukuk's structure and documentation - A change in the support level to Senaat to the extent it triggers a change of our top down rating approach; and has implications for the sukuk senior unsecured rating, which will require a reassessment of structural subordination at the time - Senaat does not repay its existing senior secured debt following refinancing. - Senaat does not maintain an ongoing secured debt/EBITDA ratio lower than 1x LIQUIDITY For Senaat's liquidity see 'Fitch Assigns Senaat First-Time 'A' IDR; Stable Outlook; Senior Unsecured Debt 'A(EXP)'' dated 19 November 2018 at www.fitchratings.com. Contact: https://www.fitchratings.com/site/pr/10052992 2/5
3. 11 /22/2018 [ Press Release ] Fitch Rates Senaat's Upcoming Sukuk 'A(EXP)' Primary Rating Analyst Giulio Lombardi Senior Director +39 02 879087 214 Fitch Italia S.P.A. Via Morigi, 6 Ingresso Via Privata Maria Teresa, 8 Milan 20123 Secondary Rating Analyst Shrouk Diab Associate Director +971 4 424 1250 Tertiary Rating Analyst Samer Haydar Associate Director +971 4 424 1250 Global Head of Islamic Finance Bashar Al-Natoor Senior Director +971 4 424 1242 Committee Chairperson Paul Lund Senior Director +44 20 3530 1244 Media Relations: Adrian Simpson, London, Tel: +44 20 3530 1010, Email: adrian.simpson@thefitchgroup.com Additional information is available on www.fitchratings.com. For regulatory purposes in various jurisdictions, the supervisory analyst named above is deemed to be the primary analyst for this issuer; the principal analyst is deemed to be the secondary. Applicable Criteria Corporate Rating Criteria (pub. 23 Mar 2018) (https://www.fitchratings.com/site/re/10023785) Corporates Notching and Recovery Ratings Criteria (pub. 23 Mar 2018) (https://www.fitchratings.com/site/re/10024585) Government-Related Entities Rating Criteria (pub. 25 Oct 2018) (https://www.fitchratings.com/site/re/10047173) Sukuk Rating Criteria (pub. 25 Jul 2018) (https://www.fitchratings.com/site/re/10039109) Additional Disclosures Dodd-Frank Rating Information Disclosure Form (https://www.fitchratings.com/site/dodd-frankdisclosure/10052992) Solicitation Status (https://www.fitchratings.com/site/pr/10052992#solicitation) Endorsement Policy (https://www.fitchratings.com/regulatory) ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTPS://WWW.FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEB SITE AT 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, https://www.fitchratings.com/site/pr/10052992 3/5
4. 11 /22/2018 [ Press Release ] Fitch Rates Senaat's Upcoming Sukuk 'A(EXP)' COMPLIANCE, AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE CODE OF CONDUCT SECTION OF THIS SITE. DIRECTORS AND SHAREHOLDERS RELEVANT INTERESTS ARE AVAILABLE AT HTTPS://WWW.FITCHRATINGS.COM/SITE/REGULATORY. 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. Copyright © 2018 by Fitch Ratings, Inc., Fitch Ratings Ltd. and its subsidiaries. 33 Whitehall Street, NY, NY 10004. Telephone: 1-800-753-4824, (212) 908-0500. Fax: (212) 480-4435. Reproduction or retransmission in whole or in part is prohibited except by permission. All rights reserved. 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5. 11 /22/2018 [ Press Release ] Fitch Rates Senaat's Upcoming Sukuk 'A(EXP)' issued by a particular issuer, or insured or guaranteed by a particular insurer or guarantor, for a single annual fee. Such fees are expected to vary from US$10,000 to US$1,500,000 (or the applicable currency equivalent). The assignment, publication, or dissemination of a rating by Fitch shall not constitute a consent by Fitch to use its name as an expert in connection with any registration statement filed under the United States securities laws, the Financial Services and Markets Act of 2000 of the United Kingdom, or the securities laws of any particular jurisdiction. Due to the relative efficiency of electronic publishing and distribution, Fitch research may be available to electronic subscribers up to three days earlier than to print subscribers. For Australia, New Zealand, Taiwan and South Korea only: Fitch Australia Pty Ltd holds an Australian financial services license (AFS license no. 337123) which authorizes it to provide credit ratings to wholesale clients only. Credit ratings information published by Fitch is not intended to be used by persons who are retail clients within the meaning of the Corporations Act 2001 Fitch Ratings, Inc. is registered with the U.S. Securities and Exchange Commission as a Nationally Recognized Statistical Rating Organization (the "NRSRO"). While certain of the NRSRO's credit rating subsidiaries are listed on Item 3 of Form NRSRO and as such are authorized to issue credit ratings on behalf of the NRSRO (see https://www.fitchratings.com/site/regulatory), other credit rating subsidiaries are not listed on Form NRSRO (the "non-NRSROs") and therefore credit ratings issued by those subsidiaries are not issued on behalf of the NRSRO. However, non-NRSRO personnel may participate in determining credit ratings issued by or on behalf of the NRSRO. SOLICITATION STATUS The ratings above were solicited and assigned or maintained at the request of the rated entity/issuer or a related third party. Any exceptions follow below. Endorsement Policy Fitch's approach to ratings endorsement so that ratings produced outside the EU may be used by regulated entities within the EU for regulatory purposes, pursuant to the terms of the EU Regulation with respect to credit rating agencies, can be found on the EU Regulatory Disclosures (https://www.fitchratings.com/regulatory) page. The endorsement status of all International ratings is provided within the entity summary page for each rated entity and in the transaction detail pages for all structured finance transactions on the Fitch website. These disclosures are updated on a daily basis. Fitch Updates Terms of Use & Privacy Policy We have updated our Terms of Use and Privacy Policies which cover all of Fitch Group’s websites. Learn more (https://www.thefitchgroup.com/site/policies). https://www.fitchratings.com/site/pr/10052992 5/5