Press Release

JCR-VIS assigns rating to Basel 3 compliant Tier 1 Sukuk by Dubai Islamic Bank Pakistan Limited
 

Karachi, December 07, 2018: JCR-VIS Credit Rating Company Limited (JCR-VIS) has assigned preliminary rating of ‘A’ (Single A) to Dubai Islamic Bank Pakistan Limited’s (DIBPL) proposed Basel 3 compliant Tier-1 Sukuk. Outlook on the assigned rating is ‘Stable’. Rating will be finalized upon review of signed legal documents.

DIBPL is in the process of issuing privately placed/ OTC Listed, perpetual, unsecured, subordinated, non-cumulative and contingent convertible Shariah compliant Sukuk amounting up to Rs. 3.3b (inclusive of green shoe option of Rs. 300m). The issue proceeds will contribute towards the bank’s additional Tier-1 (ADT-1) capital and will be utilized towards enhancement of the bank’s business operations. DIBPL’s ADT-1 instrument will rank ahead of claims of ordinary shareholders but below the bank's senior creditors, including depositors.

The assigned rating portrays the relative risk of the ADT-1 instrument wherein issuer has full discretion on coupon payments, profit servicing from only profits for the year and conversion feature in the event of pre-specified trigger events, lock-in clause and point of non-viability in terms of regulatory requirements. While the regulatory framework may not consider a missed coupon payment as a default; the credit rating methodology employed by JCR-VIS would treat such missed payments as an event of default. In normal course of business, JCR-VIS believes that chances of non-performance risk are considered remote.

JCR-VIS has assigned entity ratings of AA-/A-1 (Double A Minus/A-One) to DIBPL indicating high credit quality. The assigned ratings reflect the Bank’s sound asset quality indicators, strong & consistent profitability growth over the last three years and adequate liquidity and capitalization indicators. Ratings assigned to DIBPL incorporate sound profile of the sponsor, Dubai Islamic Bank (DIB), the largest Islamic bank operating in United Arab Emirates. DIB has been rated ‘A/A-1’ (Single A/A-One) on the international scale. Support from the parent has been witnessed in the past both in the form of financial assistance and technical knowledge transfer and JCR-VIS expects this support to continue going forward.

For further information on this rating announcement, please contact Mr. Talha Iqbal (Ext: 213) or the undersigned (Ext: 201) at 021-35311861-70 or fax to 021-35311872-3.



Javed Callea
Advisor


Applicable rating criterion: Commercial Banks Methodology -March 2018
http://jcrvis.com.pk/docs/Meth-CommercialBanks201803.pdf

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Information herein was obtained from sources believed to be accurate and reliable; however, JCR-VIS Credit Rating Company Limited (JCR-VIS) does not guarantee the accuracy, adequacy or completeness of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information. JCR-VIS, the analysts involved in the rating process and members of its rating committee do not have any conflict of interest relating to the rating(s)/ranking(s) mentioned in this report. JCR-VIS is not an NRSRO and its credit ratings are not NRSRO credit ratings. JCR-VIS is paid a fee for most rating assignments. This rating/ranking is an opinion and is not a recommendation to buy or sell any securities. Copyright 2018 JCR-VIS Credit Rating Company Limited. All rights reserved. Contents may be used by news media with credit to JCR-VIS.

JCR-VIS Credit Rating Company Limited