Financing Corporation’s US$ 200m bonds (sukuk) due in 2013
Standard & Poor’s, the world's foremost provider of independent credit ratings, indices, risk evaluation, investment research and data, has assigned its BBB – senior secured rating to Tabreed 06 Financing Corporation’s US$ 200 million Trust certificates due in 2013.
The rating on the Trust Certificates reflects the Corporate Credit Rating (CCR) of National Central Cooling Company PJSC (Tabreed) – the Middle East’s district cooling pioneer.
“This is a great achievement for Tabreed and reflects the financial strength and the future potential of the company,” said Karl Marietta, Chief Financial Officer of the company.
“We have just announced our second sukuk which is aimed at raising additional capital for the company’s ambitious expansion plans which necessitate a further initial investment in building more cooling plants.
“This rating for the sukuk demonstrates the confidence of the international financial investors in Tabreed’s future.”
The Trust Certificates benefit from a similar security structure to Tabreed’s other senior secured borrowings and therefore their rating is equalized with that of Tabreed’s corporate credit rating. The company was just last week rated BBB-/Stable by S&P.
While the purchase undertaking under the Trust Certificates are ranked alongside Tabreed’s corporate obligations, they are secured over the assets to be constructed from the proceeds of this sukuk.
Specific features of this Istisna’a sukuk financing ensure that they are equal in seniority to Tabreed’s existing sukuk borrowings:
The trustee in the structure holds proceeds from the notes issue in a transaction account in favour of the certificate holders. A charge over the assets is also held with the trustee in favour of the certificate holders.
There is a negative pledge over the assets held by the trustee in favour of the certificate holders so no current or future projects entered into the Tabreed can claim revenues over the specific plants assigned to these trust holders.
There is a cross default clause and a cash waterfall structure linked to distributions which is similar to Tabreed’s other senior secured financings.
In this case, the sukuk structure provides adequate security over Tabreed’s assets to be treated as well-secured debt, and is not subordinated to existing sukuk borrowings.
Tabreed is a UAE public joint stock company established in June 1998 and is now one of the world’s largest district cooling utilities. Tabreed provides district cooling services throughout the GCC countries with offices in Dubai, Abu Dhabi, Ras Al Khaimah, Doha, Manama, Al Khobar and Muscat. The company has been growing at a very rapid pace and won two gold awards by the International District Energy Association in the USA for new customers by the number of buildings it serves and by the cooling load.
Tabreed pioneers energy efficient gas-fired and electric-powered district cooling solutions in the UAE and across the region. The company offers customers the highest quality service through an integrated energy system devised to help them optimize their energy usage and reduce power and maintenance costs. Tabreed is a member of the International District Energy Association (IDEA), Association of Energy Engineers (AEE), International Association for Energy Economics (IAEE), International Institute of Refrigeration (IIR), American Gas Cooling Centre, Inc. (AGCC) and the Dubai Quality Group.
