Fitch Ratings has upgraded UAE-based Tamweel PJSC’s Long-Term Issuer Default Rating (IDR) to ‘A’ from ‘BBB+’, Short-Term IDR to ‘F1’ from ‘F2’ and Support Rating to ‘1’ from ‘2’. Fitch has simultaneously withdrawn Tamweel’s ratings. At the same time, the senior unsecured programme rating of Tamweel Funding III Limited (TFIII) has been upgraded to ‘A’ from ‘BBB+’ and withdrawn, and the senior unsecured Long-Term rating of the guaranteed sukuk issued by TF III has been affirmed at ‘A’. A full list of rating actions is at the end of this rating action commentary.
Tamweel’s IDRs, Support Rating and the TFIII senior unsecured programme rating have been equalised with those of its majority shareholder, Dubai Islamic Bank (DIB), resolving the Rating Watch Positive (RWP) placed on the ratings on 02 April 2013 (see ‘Fitch Places Tamweel on Rating Watch Positive, Affirms DIB at ‘A’. dated 02 April 2013 on www.fitchratings.com).
The rating actions follow the increase of DIB’s stake in the company, and the greater level of management and operational integration of Tamweel into DIB’s franchise. In May 2013, DIB increased its stake in Tamweel to 86.5% from 58.3% in a share swap deal. Subsequently, at an Extraordinary Meeting held on 07 July 2013, Tamweel’s shareholders approved the delisting of its shares from the Dubai Financial Market, subject to relevant regulatory approval.
Fitch has withdrawn the ratings as they are no longer considered analytically meaningful. Following an AED1.1bn sukuk repayment in July 2013, Tamweel’s sole remaining sukuk is one issued by TFIII (maturing in January 2017) and guaranteed by DIB; any future funding requirements will be arranged through DIB.
KEY RATING DRIVERS: IDRs AND SUPPORT RATING
Tamweel’s IDRs and Support Rating are driven by expected support from DIB. Fitch also considers that the extremely high probability of support from the UAE authorities for DIB would extend to Tamweel, if needed.
Evidence of strong parent and subsidiary linkages include DIB approving Tamweel’s strategy, providing high level management oversight and being the main source of contingency funding. In addition, DIB’s and Tamweel’s existing residential freehold and non-freehold mortgage portfolio, including new business origination, is now being managed by one home finance team using DIB’s extensive network and distribution channels.
