KUALA LUMPUR: Malaysian Rating Corporation Bhd has maintained the rating of AA+IS/Stable Outlook assigned to CIMB Islamic Bank Bhd's (CIMB Islamic) RM2.0 billion junior Sukuk programme following the removal of step-up profit payment provisions under the programme.
The rating agency said on Friday, Sept 17 the proposed amendments will only affect future issuances under the programme and the legal terms of the current outstanding sukuk will remain unchanged.
MARC's last rating action on CIMB Islamic and its rated debt was on May 7, 2010 when the rating agency upgraded the bank's long-term financial institution rating to AAA from AA+ and revised its debt rating to AA+ from AA.
CIMB Islamic amended the principal terms and conditions of the programmes mainly by removing the provision of step-up periodic payment rate for the junior Sukuk programme.
The amendment takes into account the requirements for Tier 2 capital in the proposals of the Basel Committee on Banking Supervision in December 2009 which prohibit incentives to redeem or the creation of any expectation that a call will be exercised.
CIMB Islamic has implemented the changes to ensure that issuances under the programme would continue to qualify as Tier 2 capital for the computation of the risk weighted capital adequacy ratio under Bank Negara Malaysia regulations on a prospective basis.
The current rating assigned to CIMB Islamic's junior Sukuk programme is one notch lower than CIMB Islamic's financial institution rating of AAA, reflecting its position relative to deposits and senior debt.
Proceeds from the junior Sukuk programme will be used for CIMB Islamic's banking operations or any other Shariah-compliant use as approved by the Shariah adviser.
The rating agency said on Friday, Sept 17 the proposed amendments will only affect future issuances under the programme and the legal terms of the current outstanding sukuk will remain unchanged.
MARC's last rating action on CIMB Islamic and its rated debt was on May 7, 2010 when the rating agency upgraded the bank's long-term financial institution rating to AAA from AA+ and revised its debt rating to AA+ from AA.
CIMB Islamic amended the principal terms and conditions of the programmes mainly by removing the provision of step-up periodic payment rate for the junior Sukuk programme.
The amendment takes into account the requirements for Tier 2 capital in the proposals of the Basel Committee on Banking Supervision in December 2009 which prohibit incentives to redeem or the creation of any expectation that a call will be exercised.
CIMB Islamic has implemented the changes to ensure that issuances under the programme would continue to qualify as Tier 2 capital for the computation of the risk weighted capital adequacy ratio under Bank Negara Malaysia regulations on a prospective basis.
The current rating assigned to CIMB Islamic's junior Sukuk programme is one notch lower than CIMB Islamic's financial institution rating of AAA, reflecting its position relative to deposits and senior debt.
Proceeds from the junior Sukuk programme will be used for CIMB Islamic's banking operations or any other Shariah-compliant use as approved by the Shariah adviser.
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