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Tuesday, 2 October 2012

Fitch Assigns Bahrain Mumtalakat Holding Company B.S.C. Sukuk Murabahah Programme 'BBB' Rating

Fitch Ratings has assigned Bahrain Mumtalakat Holding Company B.S.C.'s ('BBB'/Stable/'F3') MYR3bn Sukuk Murabahah Programme a ' BBB' rating. The final rating is the same as the expected rating reflecting the completion of the issuance and receipt of final documents conforming to the information previously received by Fitch.

The Sukuk Murabahah Programme's rating is in line with Mumtalakat 's Long-term Issuer Default Rating (IDR) and senior unsecured rating. Mumtalakat is wholly-owned by the Government of Bahrain and was created to act as an independent holding company for the Government of Bahrain's stakes in strategic non-oil and gas assets of the Kingdom of Bahrain.

According to the terms outlining the transaction's structure, Mumtalakat will issue MYR-denominated sukuk (Islamic bonds) of up to MYR3bn (aggregate outstanding) or its equivalent in foreign currency which it will use for its Shariah-compliant general corporate purposes as source of capital and as part of its strategy for refinancing existing debt maturities in the coming years.

Mumtalakat's liabilities under the sukuk issuances will be governed by the laws of Malaysia, and Fitch believes that they would rank pari passu with Mumtalakat 's other senior unsecured obligations. That said, legal enforcement of liabilities under Malaysian law relating to Islamic finance in Bahrain has not been adequately tested yet and court judgments might depart from this view. Fitch's rating for the Programme reflects Fitch's belief that Mumtalakat would stand behind its obligations given its important role in the Government of Bahrain's investment strategies and related implications of any default for the Bahrain sovereign.

In accordance with its criteria, by assigning a rating to the Programme, Fitch is not expressing an opinion as to whether the Programme and/or any sukuk issuance under the Programme are compliant with Shariah principles.

The agency applies its parent and subsidiary rating linkage methodology in rating Mumtalakat, as it believes that a strong relationship exists between the company and the Kingdom of Bahrain ('BBB'/Stable/'F3'). A change in Bahrain's ratings would result in a change in Mumtalakat's ratings. Any change in the implied support of, commitment from, and/or ownership by the Government of Bahrain could have negative rating implications for Mumtalakat. In addition, raising substantial debt on behalf of subsidiaries or the companies in which Mumtalakat has investments or guaranteeing additional debt of subsidiaries or such companies by Mumtalakat would be a negative credit factor.

(Global Arab Network / 01 Oct 2012)

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