July 2 - Standard & Poor's Ratings Services said today that it has assigned
its 'BBB+' issue rating to the Malaysian ringgit (MYR) 1.5 billion Islamic
medium-term note program launched by the Development Bank of Kazakhstan (DBK;
BBB+/Stable/A-2). The rating on the program and any issuance under it is linked
to the issuer credit rating on the DBK. We believe the rationale for the
transaction is to raise funds in accordance with the Islamic principle of
Murabahah, with commodities as underlying assets.
Under the terms of the transaction, sukuk holders purchase the commodities
from the Bursa Suq Al-Sila's commodity market at a purchase price, with the
total value of that price limited under the program to MYR1.5 billion. DBK
will immediately repurchase commodities from sukuk holders at a deferred sale
price, which is defined as the purchase price plus profit and has to be
settled over the tenor of sukuk. DBK will issue sukuk to the sukuk holders,
which confirms the sukuk holders' ownership of the commodities and their
entitlement to receive the deferred sale price. DBK will then sell commodities
back to the commodity market to raise the issuance proceeds. The tenor of the
program is 20 years and the maturity of individual issues shall be more than
one year and not exceed the remaining tenor of the program.
Standard & Poor's considers DBK's obligations under the transaction to be as
important as its senior unsecured obligations, because the repayments to sukuk
holders depend solely on the credit performance of DBK and are, in our view,
ranked pari passu with other senior unsecured debt issued by DBK.
RELATED CRITERIA AND RESEARCH
-- Rating Government-Related Entities: Methodology And Assumptions, Dec.
-- Criteria For Determining Transfer And Convertibility Assessments, May
-- Standard & Poor's Approach To Rating Sukuk, Sept. 17, 2007
-- Glossary Of Islamic Finance Terms, Jan. 7, 2008
Complete ratings information is available to subscribers of RatingsDirect on
the Global Credit Portal at www.globalcreditportal.com. All ratings affected
by this rating action can be found on Standard & Poor's public Web site at
www.standardandpoors.com. Use the Ratings search box located in the left