Fitch understands that the proceeds will be used for general corporate purposes.
Key Rating Drivers
The trust certificate rating is driven solely by Mumtalakat's IDRs. This reflects Fitch's view that default of these senior unsecured obligations would reflect the default of Mumtalakat in accordance with Fitch's rating definitions.
Fitch has given no consideration to any underlying assets or any collateral provided, as we believe that the issuer's ability to satisfy payments due on the certificates will ultimately depend on Mumtalakat satisfying its unsecured payment obligations to the issuer under the transaction documents described in the prospectus.
In Fitch's view, Mumtalakat would be required to ensure full and timely repayment of MSHC's sukuk obligations due to Mumtalakat's various roles and obligations under the Mumtalakat Sukuk Trust Certificate Issuance Programme's structure and documentation.
On each wakala distribution determination date, Mumtalakat as service agent shall pay into the relevant transaction account amounts standing to the credit of the collection account, which is intended to fund an amount equal to the aggregate of the periodic distribution amounts payable by the trustee under the certificates of the relevant series on the immediately following periodic distribution date. Fitch notes that Mumtalakat can take other measures to ensure that there is no shortfall and that funding of the principal payment and the portfolio income is paid in full, and in a timely manner.
On any dissolution or default event, the aggregate amounts of deferred payment price then outstanding shall become immediately due and payable; and the trustee will have the right under the purchase undertaking to require Mumtalakat to purchase all of its rights, title, interests, benefits and entitlements in, to and under wakala assets at the relevant exercise price.
The exercise price payable by Mumtalakat 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: the sum of the face amounts then outstanding and the accrued and unpaid periodic distribution amounts on the certificates (if any) to the date of redemption, together with any amounts specified in the applicable final terms.
Mumtalakat as a service agent under the service agency agreement in case of total loss irrevocably and unconditionally undertakes to pay any total loss shortfall amount.
The payment obligations of Mumtalakat (in any capacity) under the transaction documents will be direct, unconditional, unsubordinated and (subject to the negative pledge provisions) unsecured and shall at all times rank at least equally with all other present and future unsecured and unsubordinated obligations of Mumtalakat.
The sukuk issuance includes a negative pledge provision, as well as Mumtalakat's dissolution events including cross-default terminology.
Certain aspects of the transaction will be governed by English law while others will be governed by Bahraini law and Cayman Islands law. 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 Mumtalakat would stand behind its obligations.
When assigning a rating to the certificates, Fitch does not express an opinion on the certificates' compliance with sharia principles.
The certificates' rating is linked to any changes in Mumtalakat's IDRs. The rating may also be sensitive to any changes in the roles and obligations of Mumtalakat under Mumtalakat Sukuk Trust Certificate Issuance Programme.
Date of Relevant Committee
24 June 2019
Mumtalakat Sukuk Holding Company
----senior unsecured; Long Term Rating; New Rating; BB-
Primary Rating Analyst
+33 1 44 29 91 34
Fitch France S.A.S.
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Secondary Rating Analyst
+33 1 44 29 91 43
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Additional information is available on
Government-Related Entities Rating Criteria (pub. 13 Nov 2019)
Rating Criteria for International Local and Regional Governments (pub. 13 Sep 2019)
Sukuk Rating Criteria (pub. 22 Jul 2019)
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