Fitch Ratings-Dubai/London-18 May 2015

Fitch Ratings has assigned DIB Sukuk Limited's (DIB Sukuk) new issuance an expected senior unsecured rating of 'A(EXP)'.

The sukuk will be issued under DIB Sukuk's trust certificate issuance programme under which total issuance may be up to a maximum USD2.5bn equivalent. The final rating is contingent on the receipt of final documents conforming to the information already received.

DIB Sukuk, a legal entity incorporated in the Cayman Islands, is set up solely to act as the issuer of the certificates and trustee for the certificate holders.

KEY RATING DRIVERS

The trust certificate issuance programme's expected rating is driven by Dubai Islamic Bank PJSC's (DIB) 'A' Long-term Issuer Default Rating, reflecting Fitch's view that default of these senior unsecured obligations would reflect default of the entity in accordance with Fitch's rating definitions. The rating also takes into account the sukuk's structure and documentation, which includes the following features:

- On the scheduled dissolution (or following the occurrence of a dissolution event), the trustee will have the right under the purchase undertaking to require DIB to purchase all of the trustee's rights, title, interests, benefits and entitlements in, to and under the relevant portfolio.

- The dissolution amount will be equal to the aggregate outstanding face value of the certificates plus all accrued, unpaid periodic distribution amounts (if any) relating to the certificates and any additional outstanding amounts under the liquidity facility.

- Prior to each periodic distribution date, the service agent will pay to the trustee an amount reflecting returns by the relevant portfolio during the relevant distribution period, which is intended to be sufficient to fund the periodic distribution amounts payable. Fitch also notes that other measures can be taken to ensure that there is no shortfall and that funding and the portfolio income are redeemed in full.

- The payment obligations of DIB under the purchase undertaking and service agency agreement will be direct, unconditional, unsubordinated and unsecured obligations of DIB, which rank at least pari passu with all other present and future unsubordinated and unsecured obligations of DIB.

The programme includes a negative pledge provision binding DIB, as well as financial reporting obligations, covenants and cross-default clauses. The documentation does not contain a change of control clause.

The master trust deed, each supplemental trust deed, the programme agreement, the agency agreement, the service agency agreement, the purchase undertaking, the sale undertaking and any non-contractual obligations arising out of or in connection with the same will be governed by English law. Fitch also notes that any dispute may also be referred to the courts in England or the courts of the DIFC. The master purchase agreement and any supplemental purchase contract and any sale and/or transfer agreement entered into pursuant to the purchase undertaking or the sale undertaking, will be governed by and construed in accordance with the laws of the Emirate of Dubai and, to the extent applicable in Dubai, the federal laws of the United Arab Emirates. The corporate services agreement and the registered office will be governed by 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 considers DIB's intention to support DIB Sukuk and its obligations; hence Fitch's rating for the certificates therefore reflects the agency's belief that DIB would stand behind its respective obligations under the documentation.

RATING SENSITIVITIES

The ratings are sensitive to a change in DIB's Long-term IDR. This in turn is sensitive to a reduction in the perceived ability or willingness of the authorities to provide support to the bank. Given the robust economy, the authorities' strong track record of support for local banks and no plans for resolution legislation at this stage, we consider downward pressure to be low.

RATING ACTIONS:

New rating:

DIB Sukuk Limited's new issuance assigned at 'A(EXP)'

DIB's other ratings are as follows:

Long-term foreign currency IDR: 'A'; Outlook Stable

Short-term foreign currency IDR: 'F1'

Viability Rating: 'bb'

Support Rating: '1'

Support Rating Floor: 'A'

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Contact:
Primary Analyst
Redmond Ramsdale
Director
+971 4 424 1202
Fitch Ratings Limited
Al Thuraya Tower 1, Office 1805 and 1806
Media City, PO Box 502030
Dubai

Secondary Analyst
Eric Dupont
Senior Director
+33 1 4429 91 31

Committee Chairperson
Gordon Scott
Managing Director
+44 20 3530 1075

Media Relations: Elaine Bailey, London, Tel: +44 203 530 1153, Email: elaine.bailey@fitchratings.com.

Date of Rating Committee: 03 September 2014

Additional information is available at www.fitchratings.com.

Applicable criteria, 'Global Bank Rating Criteria' dated 20 March 2015, are available at www.fitchratings.com.

© Press Release 2015