Standard & Poor's Ratings Services has affirmed its 'AAA' senior unsecured debt rating on the increased $1.5 billion Islamic trust certificate issuance program of IDB Trust Services Ltd., a special-purpose entity incorporated in Jersey that raises funds for Islamic Development Bank (IsDB; AAA/Stable/A-1+).

The rating on the program is equal to the issuer credit rating on IsDB. With each sukuk issuance under the program, IDB Trust Services Ltd. purchases a portfolio of sukuk assets from IsDB. The purchase price is funded by the sukuk proceeds.

The sukuk assets were originated and are serviced by IsDB. The profits generated on the sukuk assets are used to make periodic distribution payments on the notes. At maturity of the notes issued under the program, IsDB is obliged to purchase back from IDB Trust Services Ltd. the outstanding sukuk assets for an amount equal to the principal repayment together with any unpaid profits due to the noteholders.

In addition, IsDB grants a noninterest-bearing liquidity facility to IDB Trust Services Ltd., which can be drawn if the profits on the sukuk assets are insufficient to pay periodic distribution payments on the sukuk.

The equalization of the rating on the program, and notes issued hereunder, with the issuer credit rating on IsDB is based on our view that the full and timely payment of periodic distribution and principal on the sukuk ultimately depend on IDB Trust Service Ltd.'s recourse to IsDB's obligations under the program, including IsDB's obligation to provide the liquidity facility and to repurchase the sukuk assets.

Global Arab Network