Fitch Ratings has assigned
The programme is issued by stc
The trustee is an exempted company with limited liability incorporated in the
stc will use the proceeds for general corporate purposes. The assignment of the final rating is contingent on the receipt of final transaction documents materially conforming to information already reviewed. If these conditions are not met, or if the programme is not put into place, Fitch will review the rating.
Key Rating Drivers
The expected rating of the sukuk is anchored to stc's Long-Term Issuer Default Rating (IDR). This reflects Fitch's view that a default of these senior unsecured obligations would reflect a default of stc, in accordance with Fitch's rating definitions.
Fitch has not given credit to any underlying assets or collateral, as it believes the issuer's ability to satisfy payments due on the trust certificates ultimately depends on stc's satisfaction of its unsecured payment obligations to the issuer as described in the offering circular and other transaction documents.
In addition, stc would be required to ensure full and timely repayment of the issuer's obligations due to the former's various roles and obligations under the sukuk structure and documentation, including but not limited to the following features:
The sale of broadband services for a price at least equal to the minimum sale price will be sufficient to fund the periodic distribution amounts payable by the issuer in respect of the certificates. The obligor agrees that if, in any distribution period, any outstanding broadband services are sold for less than the minimum sale price and a sales shortfall arises, the obligor will indemnify the trustee for the shortfall on an after-tax basis. Moreover, the obligor irrevocably undertakes to purchase from the trustee any surplus outstanding broadband data services for any distribution period for an amount equal to surplus outstanding broadband data services multiplied by the minimum sale price (the surplus outstanding exercise price).
On the business day prior to the scheduled dissolution date, stc as a servicing agent, will procure the payment to the trustee of the required amount and any amounts received for any sales shortfall to redeem the certificates. Provided that a dissolution event has occurred and is continuing, the obligor will be required to purchase the outstanding broadband data services (together with all of the issuer's rights, interests, benefits and entitlements, present and future, in, to and under them) at the exercise price, which shall be paid into the transaction account in the specified currency.
The exercise price is equal to the aggregate face amount of the trust certificates then outstanding, plus all accrued but unpaid periodic distribution amounts for such certificates, and any amounts payable by the trustee (in any capacity) under the transaction documents, including any outstanding amounts payable under any liquidity facility for the relevant series)
Upon the occurrence of a dissolution event, the trust certificates of the relevant series may be redeemed in full at an amount equal to the relevant dissolution distribution amount, which is the sum of the outstanding face amount of such trust certificate and any due but unpaid periodic distribution amounts of such trust certificate.
stc's payment obligations under the transaction documents (in any capacity), will be unconditional, unsubordinated, and (subject to the negative pledge) unsecured obligations of the obligor and shall rank at least pari passu with all its other present and future unsecured and unsubordinated obligations from time to time outstanding.
The terms of the certificates include a negative pledge provision, obligor event, a cross-default provision, conditional change-of-control clause and indemnity.
The sukuk documentation will include an obligation on stc to ensure that at all times, the tangibility ratio is more than 50%. The tangibility ratio is defined as the aggregate value of the outstanding broadband data services and further broadband data services, to (i) the aggregate value of the outstanding broadband data services and further broadband data services of the relevant series; and (ii) the aggregate amounts in the relevant collection account and reserve account. Failure of stc to comply with this obligation will not constitute an obligor event.
If the tangibility ratio falls below 33% (tangibility event), the certificate holders shall have the option to require the redemption of all or any of their trust certificates at the tangibility event put right exercise price. The tangibility event put right exercise price is the aggregate face amount of the certificates subject to the put right, plus all due but unpaid periodic distribution amounts on such certificates, plus without duplication, any amounts payable by the trustee under the transaction documents to which it is a party.
Fitch expects stc to maintain the tangibility ratio above 50% throughout the tenor of the sukuk. Fitch expects that any issuance of any trust certificates under the programme would be matched by the sale of broadband data services by stc to the trustee, to ensure the tangibility ratio is maintained at 50% or higher at all times.
All transaction documents will be governed by English law.
Fitch does not express an opinion on whether the relevant transaction documents are enforceable under any applicable law. However, Fitch's rating on the trust certificates reflects its view that stc would stand behind its obligations. Fitch does not express an opinion on the trust certificates' compliance with sharia principles when assigning ratings to the lease certificates.
Peer Analysis
For stc's peer analysis refer to '
Fitch's Key Rating-Case Assumptions
The sukuk ratings are derived from stc's Long-Term IDR and are in line with its senior unsecured rating.
RATING SENSITIVITIES
Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade
A downgrade of stc's IDR would lead to a similar action on the sukuk rating. The sukuk's rating may also be sensitive to adverse changes to the roles and obligations of stc and stc
Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade
An upgrade of stc's IDR would lead to a similar action on the sukuk rating.
Liquidity and Debt Structure
See '
REFERENCES FOR SUBSTANTIALLY MATERIAL SOURCE CITED AS KEY DRIVER OF RATING
The principal sources of information used in the analysis are described in the Applicable Criteria.
MACROECONOMIC ASSUMPTIONS AND SECTOR FORECASTS
Click here to access Fitch's latest quarterly Global Corporates Sector Forecasts Monitor data file which aggregates key data points used in our credit analysis. Fitch's macroeconomic forecasts, commodity price assumptions, default rate forecasts, sector key performance indicators and sector-level forecasts are among the data items included.
ESG Considerations
Fitch does not provide ESG relevance scores for stc or stc
In cases where Fitch does not provide ESG relevance scores in connection with the credit rating of a transaction, programme, instrument or issuer, Fitch will disclose any ESG factor that is a key rating driver in the key rating drivers section of the relevant rating action commentary. For more information on Fitch's ESG Relevance Scores, visit https://www.fitchratings.com/topics/esg/products
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