Two global rating agencies – Standard & Poor's and Fitch Ratings – had assigned "A" credit rating to the upcoming sukuk being issued under the $2 billion certificates issuance programme by Ras Al Khaimah Capital.
RAK Capital is a Cayman-based special-purpose entity established for this transaction. The Ijara transaction structure allows Ras Al Khaimah to raise funds on Shariah-compliant terms, with better distribution and sales perspectives, rather than to distinguish its obligations under this transaction from those under a conventional bond.
The rating on the programme is further supported by the contractual commitment and in view of the strong incentive for the emirate to treat its obligations under this transaction as direct and unconditional obligations, pari passu with its other obligations, including conventional debt.
"Although we consider that governments may sometimes in stressful fiscal situations consider rent or lease obligations as subordinate to bonds or bank loans. We believe that the government will consider the performance of the certificates as being equally important as the performance of conventional debt.
Fitch assigned RAK Capital's $400m trust certificates (sukuk) due 2014 a senior unsecured 'A' rating.
The issue is the second under RAK Capital's certificates issuance programme, under which total issuance may be up to a maximum $2bn equivalent.
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