S&P assigns preliminary 'A-' rating on MSSB's proposed Wakala sukuk trust certificates

Standard & Poor's Ratings Services today assigned its preliminary 'A-' issue rating to the proposed US dollar-denominated sukuk trust certificates to be issued by Malaysia Sovereign Sukuk Bhd (MSSB). MSSB is a special-purpose company incorporated in Malaysia for issuing sukuk trust certificates, it said in a statement. This issuer will enter into a Wakala agreement with the government of Malaysia (foreign currency A /Stable/A-2; local currency A/Stable/A-1; axAAA/axA-1+). Under this arrangement, the issuer will enter into an asset sale and purchase agreement for not less than 26 per cent of the issued amount, a Grant of Rights to Services agreement for no more than 26 per cent of the issued amount, and Murabaha agreement (sale financing) agreement for not more than 48 per cent of the issued amount with Malaysia. S&P said the rating on the proposed sukuk trust certificates reflects the foreign currency rating on Malaysia because the transaction fulfills the five conditions of its criteria for rating sukuk. S&P said its opinion is based on the unconditional obligations of Malaysia to make up any shortfall between the insurance proceeds (if any) and the principal repayments related to the Ijara contract under a total loss event scenario. The rating agency said its assessment is based on information as at March 30, 2015. S&P noted that the preliminary rating is based on draft documentation. The final rating will depend upon receipt and satisfactory review of all final transaction documentation, including legal opinions. Should final documentation differ substantially from the draft documentation, it would consider a rating action on the trust certificates. The rating agency said its assessment is based on information as at March 30, 2015. S&P noted that the preliminary rating is based on draft documentation. The final rating will depend upon receipt and satisfactory review of all final transaction documentation, including legal opinions. Should final documentation differ substantially from the draft documentation, it would consider a rating action on the trust certificates. For more business news, tune in to Awani Biz starting 16 April at Astro channel 501.