A special-purpose entity -- Bank Asya Sukuk Limited (the issuer) -- incorporated in the Cayman Islands, will issue the sukuk certificates to investors (the sukuk holders) and use the proceeds to acquire an interest in a portfolio of assets comprising primarily leased assets, and murabaha rights from BankAsya (trust assets). BankAsya, as managing agent, will collect all lease and other payments from the contracts in the trust assets and will pay the issuer an amount sufficient to fund the periodic distribution amounts to sukuk holders on each distribution date. BankAsya will issue a purchase undertaking in favour of the issuer, wherein it undertakes to purchase the issuer's interest in the trust assets at the exercise price either at maturity, or before maturity if a dissolution event occurs. The presence of assets in the structure is for the purposes of Shari'ah compliance only and has no bearing on the credit risk of the certificates. Moody's ratings do not express any opinion on the structure's compliance with Shari'ah principles.
Moody's notes that the sukuk holders only have contractual rights against BankAsya, ranking pari passu with other unsecured obligations, as provided in the transaction documents. Through various structural features the sukuk holders will be effectively exposed to BankAsya's senior unsecured credit risk in foreign currency; (ii) not be exposed to the risk of the trust assets; and (iii) have no preferential claim or recourse over the trust assets.
More specifically, this is because under the transaction documentation, BankAsya is obligated to cover any shortfall between the rental and other payments from the company-owned assets and the required periodic distribution amounts to sukuk holders; and (ii) irrevocably undertakes to purchase the issuer's interest in the trust assets at the exercise price either at maturity, or before maturity if a dissolution event occurs, thus providing an obligation to redeem the certificates in full.
Furthermore, the sukuk holders have no rights to cause any sale or disposal of the trust assets, except as expressly provided under the purchase undertaking deeds and sale undertaking deeds.
The rating of the notes is provisional and represents Moody's preliminary opinion. Upon a conclusive review of the final documentation and legal opinions for the proposed debt issuance, Moody's will endeavour to assign a definitive rating to the notes. A definitive rating may differ from a provisional rating. A rating is not a recommendation to purchase, sell or invest in any securities.
The methodologies used in this rating were Bank Financial Strength Ratings: Global Methodology published in February 2007, and Incorporation of Joint-Default Analysis into Moody's Bank Ratings: A Refined Methodology published in March 2007. Please see the Credit Policy page on www.moodys.com for a copy of these methodologies.
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