Hong Kong: Fitch Ratings has assigned Bahrain’s new sovereign global trust certificate (sukuk) issuance programme, established through CBB International Sukuk Programme Company S.P.C. (CBB International), a ‘BB-‘ rating.
The rating is in line with Bahrain’s Long-Term Foreign-Currency (FC) Issuer Default Rating (IDR), which we affirmed at ‘BB-‘ with a Stable Outlook in February 2019.
CBB International is the issuer and the trustee of the sukuk incorporated primarily for the purpose of issuing the sukuk transactions. CBB International is a single-person company incorporated in the Kingdom of Bahrain with limited liability whose proprietor is the Central Bank of Bahrain (CBB).
The sukuk programme rating is driven solely by Bahrain’s ‘BB-‘ IDR. This reflects Fitch’s view that default of these senior unsecured obligations would reflect a default of Bahrain in accordance with Fitch’s rating definitions.
“We have not considered any underlying assets or collateral provided when assigning a rating to the CBB International sukuk programme, as we believe that the issuer’s ability to satisfy payments due on the certificates will ultimately depend on the Bahraini government satisfying its unsecured payment obligations to the issuer under the transaction documents described in the base prospectus and other supplementary documents,” Fitch in a statement said.
In addition to the Bahraini government’s propensity to ensure repayment of CBB International sukuk, in Fitch’s view, it would also be required to ensure full and timely repayment of CBB International’s obligations pursuant to the Bahrain government’s various roles and obligations under the programme’s structure and documentation.
The CBB International sukuk programme includes a negative pledge provision that is binding on the Bahraini government, as well as financial reporting obligations, covenants and Bahrain event and default acceleration terms. The documentation does not contain a change of control clause.
