17 May 2016
Fitch Ratings-Dubai/London - Fitch Ratings has affirmed EI Sukuk Company Ltd.'s (EI Sukuk) updated USD2.5bn certificate issuance programme's 'A+' rating on the basis of the final programme documents received. The rating is in line with Emirates Islamic Bank PJSC (EI) Long-Term Foreign Currency Issuer Default Rating (IDR) and senior unsecured rating of 'A+'. The Outlook on the IDR is Stable. Fitch has also affirmed EI Sukuk's outstanding USD1bn issuance maturing on January 2017 and 2018 under the USD2.5bn certificate issuance programme at 'A+'.

EI Sukuk (previously EIB Sukuk Company Ltd.), a Cayman Islands-registered special purpose vehicle, is the issuer and the trustee under the programme for the sole purpose of issuing certificates under the programme and entering into the transactions contemplated by the transaction documents.

KEY RATING DRIVERS

The rating on the current outstanding certificates is driven by Emirates NBD's (ENBD) Long-Term IDR of 'A+'/Stable. This is due to the Sukuk structure where ENBD, as the guarantor, provides a direct and unconditional guarantee of EI's Sukuk obligations under the transaction documents as specifically set out in the master trust deed. ENBD undertakes that its obligations under the guarantee will at all times rank at least pari passu with ENBD's other senior unsecured obligations.

Under the updated programme, among other changes, further issuance will not benefit from an ENBD guarantee.

The updated certificate issuance programme's rating is driven solely by EI's IDR and senior unsecured ratings of 'A+'. This reflects Fitch's view that default of these senior unsecured obligations would reflect default of EI in accordance with Fitch's rating definitions.

At end-2015, EI qualified as a 'material subsidiary' under the cross-default clause of ENBD's EMTN programme. Fitch believes this would provide an added incentive to support EI and the performance of obligations issued under the new programme.

Fitch has not considered any underlying assets or collateral provided, as we believe that the issuer's ability to satisfy payments due on the certificates will ultimately depend on EI satisfying its unsecured payment obligations to the issuer under the transaction documents described in the prospectus and other supplementary documents.

In addition to EI's propensity to ensure repayment of the EI Sukuk, in Fitch's view it would also be required to ensure full and timely repayment of EI Sukuk's obligations due to EI's various roles and obligations under the sukuk structure and documentation, especially - but not limited to - the features explained below:

- Prior to each periodic distribution date, EI as the service agent will pay to the trustee the required amount from the wakala portfolio income revenues generated during the relevant return accumulation period ending on such periodic distribution date. Fitch notes that EI can take other measures to ensure that there is no shortfall and that funding and the periodic distribution are paid in full on such date.

- Upon the occurrence of the earlier of: (i) a dissolution event and (ii) the maturity date; and (iii) an optional redemption date, the trustee will be entitled to exercise the purchase undertaking granted by EI and undertakes to purchase the relevant wakala portfolio at the exercise price equal to the aggregate of the outstanding amount of the certificates, accrued and unpaid distribution amounts, any outstanding amounts repayable in respect of any liquidity facility, and any outstanding service agency liabilities.

- The payment obligations of EI under the purchase undertaking and service agency agreement will be direct, unsubordinated and unsecured obligations of EI and shall at all times rank at least equally with all other unsecured and unsubordinated indebtedness and monetary obligations.

The updated programme includes a negative pledge provision, change of control clause, as well as financial reporting obligations, covenants and obligor event (i.e EI event) under the sukuk consideration (which includes default acceleration terms).

Certain aspects of the transaction will be governed by English law while others will be governed by UAE 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 on the certificates reflects the agency's belief that EI would stand behind its obligations.

When assigning ratings to the programme and certificates to be issued under it, Fitch does not express an opinion on the programme's compliance with sharia principles. There is no assurance that notes issued in the future under the programme will be assigned a rating, or that the rating assigned to a specific issue under the programme will have the same rating as the programme rating.

RATING SENSITIVITIES

The rating will be sensitive to any changes in EI's Long-Term Foreign-Currency IDR. The ratings may also be sensitive to any changes to the roles and obligations of EI under the sukuk's structure and documents.

The rating of the existing certificates is sensitive to any changes in ENBD's Long-Term Foreign-Currency IDR, which is sensitive to a reduction in the perceived ability or willingness of the UAE authorities to provide support to the banking sector, or a change in Fitch's view of support in the UAE.

Contact:
Primary Analyst
Redmond Ramsdale
Senior Director
+971 4 424 1202

Fitch Ratings Limited
Al Thuraya Tower 1, Office 1805 & 1806, Dubai Media City,
Dubai, United Arab Emirates
PO Box 502030

Secondary Analyst
Zeinab Abdalla
Associate Analyst
+971 4 424 1210

Global Head Islamic Finance
Bashar Al-Natoor
Director
+971 4 424 1242

Committee Chairperson
Alexander Danilov
Senior Director
+7 495 956 2408

Media Relations: Elaine Bailey, London, Tel: +44 203 530 1153, Email: elaine.bailey@fitchratings.com; Rose Millburn, London, Tel: +44 203 530 1741, Email: rose.millburn@fitchratings.com.

Additional information is available on www.fitchratings.com.

© Press Release 2016