Moodys.com
Please Note
We brought you to this page based on your search query. If this isn't what you are looking for, you can continue to Search Results for ""
The maximum number of items you can export is 3,000. Please reduce your list by using the filtering tool to the left.
Close
Close
Email Research
Recipient email addresses will not be used in mailing lists or redistributed.
Recipient's
Email

Use semicolon to separate each address, limit to 20 addresses.
Enter the
characters you see
Close
Email Research
Thank you for your interest in sharing Moody's Research. You have reached the daily limit of Research email sharings.
Close
Thank you!
You have successfully sent the research.
Please note: some research requires a paid subscription in order to access.
Already a customer?
LOG IN
Don't want to see this again?
REGISTER
OR
Accept our Terms of Use to continue to Moodys.com:

PLEASE READ AND SCROLL DOWN!

 

By clicking “I AGREE” [at the end of this document], you indicate that you understand and intend these terms and conditions to be the legal equivalent of a signed, written contract and equally binding, and that you accept such terms and conditions as a condition of viewing any and all Moody’s inform​ation that becomes accessible to you [after clicking “I AGREE”] (the “Information”).   References herein to “Moody’s” include Moody’s Corporation, Inc. and each of its subsidiaries and affiliates.

 

Terms of One-Time Website Use

 

1.            Unless you have entered into an express written contract with Moody’s to the contrary, you agree that you have no right to use the Information in a commercial or public setting and no right to copy it, save it, print it, sell it, or publish or distribute any portion of it in any form.               

 

2.            You acknowledge and agree that Moody’s credit ratings: (i) are current opinions of the future relative creditworthiness of securities and address no other risk; and (ii) are not statements of current or historical fact or recommendations to purchase, hold or sell particular securities.  Moody’s credit ratings and publications are not intended for retail investors, and it would be reckless and inappropriate for retail investors to use Moody’s credit ratings and publications when making an investment decision.  No warranty, express or implied, as the accuracy, timeliness, completeness, merchantability or fitness for any particular purpose of any Moody’s credit rating is given or made by Moody’s in any form whatsoever.          

 

3.            To the extent permitted by law, Moody’s and its directors, officers, employees, representatives, licensors and suppliers disclaim liability for: (i) any indirect, special, consequential, or incidental losses or damages whatsoever arising from or in connection with use of the Information; and (ii) any direct or compensatory damages caused to any person or entity, including but not limited to by any negligence (but excluding fraud or any other type of liability that by law cannot be excluded) on the part of Moody’s or any of its directors, officers, employees, agents, representatives, licensors or suppliers, arising from or in connection with use of the Information.

 

4.            You agree to read [and be bound by] the more detailed disclosures regarding Moody’s ratings and the limitations of Moody’s liability included in the Information.     

 

5.            You agree that any disputes relating to this agreement or your use of the Information, whether sounding in contract, tort, statute or otherwise, shall be governed by the laws of the State of New York and shall be subject to the exclusive jurisdiction of the courts of the State of New York located in the City and County of New York, Borough of Manhattan.​​​

I AGREE
Rating Action:

Moody's places Islamic Corporation for the Development of the Private Sector's Aa3 ratings under review for downgrade

08 Oct 2018

New York, October 08, 2018 -- Moody's Investors Service ("Moody's") has today placed under review for downgrade the Aa3 long-term issuer rating of Islamic Corporation for the Development of the Private Sector (ICD). The short-term issuer rating has been affirmed at P-1.

The decision to place the ratings on review for downgrade was underpinned by the large losses on ICD's equity investment portfolio, with a high likelihood of further equity investment losses as revaluations continue, which are likely to offset the contributions from shareholders under the second general capital increase and erode ICD's capital buffers to a position no longer consistent with a Aa3 rating. The equity revaluations also shed light on potential weaknesses in ICD's risk management. As the institution plans to grow its portfolio at a rapid pace, while reorienting its operations to different business lines, effective risk management will be key to prevent a further erosion of capital buffers.

The review will focus on the expected future performance of the equity investment and loan portfolios, the size and pace of scheduled payments under the ongoing General Capital Increase (GCI), and ICD's risk management, allowing Moody's to form a view regarding the likely evolution of ICD's capital adequacy metrics.

Concurrently, the Aa3 and (P)Aa3 senior unsecured foreign currency and senior unsecured MTN program ratings of ICDPS Sukuk Limited have also been placed under review for downgrade as the sukuk investors (certificate holders) of ICDPS Sukuk Limited are exposed to the senior unsecured credit risk of ICD. ICDPS Sukuk Limited (formerly Hilal Services Ltd) is a special purpose vehicle set up by ICD for sukuk issuance.

RATINGS RATIONALE

RATIONALE FOR THE REVIEW FOR DOWNGRADE

LIKELIHOOD OF FURTHER EQUITY INVESTMENT LOSSES OFFSETTING GENERAL CAPITAL INCREASE TO RESULT IN WEAKER CAPITAL ADEQUACY

The decision to place ICD's ratings under review for downgrade reflects the increased likelihood that ICD's capital adequacy will be materially weaker than previously assessed. ICD's leverage ratio has increased to 177% in 2017, above the average for Aa3-rated multilateral development banks (MDBs). The review period will allow Moody's to re-assess the likely evolution of ICD's key capital adequacy metrics such as the asset coverage ratio and leverage and determine if the likely future trajectory remains compatible with a Aa3 rating.

The ICD is a multilateral development institution and the private-sector branch of the Islamic Development Bank (IsDB) (Aaa stable). The ICD provides loans and equity investment to the private sector in its 53 member countries, mobilizes capital in the international financial markets, and provides advisory services to business and governments.

ICD's equity portfolio suffered heavy losses in the 2017 financial year, amounting to $107 million, which is equivalent to around the previous five years of cumulative net profits. The loss was primarily due to fair value adjustments on ICD's portfolio of unlisted equity investments, which despite accounting for just 23% of ICD's assets, accounted for 91% of the losses experienced last year. The loss resulted in a return over assets of -3.6% in 2017.

ICD's equity investments are unlisted, direct equity participations which typically carry a much higher risk profile and uncertain payoff compared to its loan portfolio. While ICD's equity portfolio has largely yielded positive returns in previous years despite this inherent riskiness, the cumulative revaluation of five investments down by 30% in 2017 resulted in a $99 million loss.

Although the losses were recognized in 2017, some of the fundamental drivers behind the revaluations have been building for several years. The losses were attributable to several factors, including weakness in Saudi Arabia's real estate market and foreign exchange movements (primarily relating to the devaluation of the Egyptian pound).

ICD's half-year financial results indicate continued underperformance in the equity portfolio, which recorded income of just $0.4 million against budgeted income of $5 million. Moody's believes there is a material risk that downward pressure on the financial performance of ICD's equity portfolio persists, particularly in Saudi Arabia's real estate sector. An ongoing decline in the expatriate population and weak investor sentiment are likely to continue to weigh on property values.

Further losses on equity investment could offset the equity build-up from the ongoing general capital increase (GCI). Equity contributions from shareholders under the GCI (ICD's second) have thus far buffered ICD's capital adequacy metrics and prevented an otherwise marked deterioration in the asset coverage and leverage ratios. In total, of the $1 billion made available for subscription, over 80% has been subscribed to under the GCI, scheduled to arrive by 2020. While Moody's base case scenario assumes that ICD will receive a very significant proportion of the capital subscriptions, smaller or slower payments would compound the deterioration in capital adequacy resulting from potential additional losses in the equity investment portfolio.

EQUITY AND LOAN EXPOSURES HIGHLIGHT POTENTIAL RISK MANAGEMENT WEAKNESSES AS OPERATIONAL STRATEGY SHIFTS

The review will also allow Moody's to determine the most likely path for ICD's asset performance in general and reassess the strength of the corporation's risk management approach, in particular as it shifts its operational focus towards lending to financial institutions from equity investment.

Asset performance has also been and is likely to remain weak in the non-equity parts of ICD's portfolio. ICD does not benefit from preferred creditor status nor sovereign guarantees. Non-Performing Loans (NPLs) increased by $41 million in the first half of 2018. After rapid loan growth lowered the NPL ratio between 2015 and 2017 to 13.4%, the NPL ratio rose to 15.5% as of June 2018. The new NPLs were accrued in the term finance portfolio from exposures to both corporate and financial institutions. A sustained increase in NPLs could signal a return to previously weak lending standards and indicate weaker risk management than Moody's previously assessed.

Meanwhile, ICD also has some exposure to Turkish entities, both via lines of credit, term finance and equity investments as well as the treasury portfolio. Overall, exposure to Turkish entities amounted to 7.7% of the balance sheet in 2017. Although the vast majority of ICD's Turkey obligors continue to meet their debt service obligations, the sharp slowdown in the Turkish economy may present a continuing risk to the performance of these exposures in the near-future.

The losses on equity investment and loans highlight potential weaknesses in the corporation's risk management approach. ICD's risk exposure will evolve as its operations shift from equity (36% of its operational assets in 2017) towards lending to financial institutions (53% of its operational assets). Moody's will assess the strength of risk management, especially as ICD intends to maintain relatively rapid growth in its overall portfolio, at around 20% annually to 2020.

WHAT COULD CHANGE THE RATING DOWN IN THE CONTEXT OF THIS REVIEW

Sustained losses in the equity investment portfolio, either evident in the current year valuation process to be completed in November 2018 or likely to occur in future years due to underlying trends affecting the portfolio, and/or indications of likely delays in scheduled capital payments, which have the effect of increasing the leverage ratio and decreasing the asset coverage ratio to levels no longer compatible with a Aa3 rating would likely lead us to downgrade ICD's ratings. Evidence of weaker risk management practices than Moody's had previously assessed would also be consistent with a lower rating.

WHAT COULD LEAD TO CONFIRMATION OF THE RATING AT THE CURRENT LEVEL

Moody's would confirm ICD's Aa3 ratings if at the end of the review period, it seemed likely that further equity losses would be limited, providing scope for the general capital increase to strengthen ICD's capital adequacy. More generally, confidence that ICD's risk management approach will adequately preserve the institution's capital while operations grow and shift focus would support a confirmation of the rating.

The principal methodology used in these ratings was Multilateral Development Banks and Other Supranational Entities published in September 2018. Please see the Rating Methodologies page on www.moodys.com for a copy of this methodology.

The local market analyst for these ratings is Thaddeus Best, +971 (423) 795-06

REGULATORY DISCLOSURES

For ratings issued on a program, series or category/class of debt, this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series or category/class of debt or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody's rating practices. For ratings issued on a support provider, this announcement provides certain regulatory disclosures in relation to the credit rating action on the support provider and in relation to each particular credit rating action for securities that derive their credit ratings from the support provider's credit rating. For provisional ratings, this announcement provides certain regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.

For any affected securities or rated entities receiving direct credit support from the primary entity(ies) of this credit rating action, and whose ratings may change as a result of this credit rating action, the associated regulatory disclosures will be those of the guarantor entity. Exceptions to this approach exist for the following disclosures, if applicable to jurisdiction: Ancillary Services, Disclosure to rated entity, Disclosure from rated entity.

Regulatory disclosures contained in this press release apply to the credit rating and, if applicable, the related rating outlook or rating review.

Please see www.moodys.com for any updates on changes to the lead rating analyst and to the Moody's legal entity that has issued the rating.

Please see the ratings tab on the issuer/entity page on www.moodys.com for additional regulatory disclosures for each credit rating.

Gabriel Torres
VP - Senior Credit Officer
Sovereign Risk Group
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 1 212 553 0376
Client Service: 1 212 553 1653

Marie Diron
MD - Sovereign Risk
Sovereign Risk Group
JOURNALISTS: 852 3758 1350
Client Service: 852 3551 3077

Releasing Office:
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 1 212 553 0376
Client Service: 1 212 553 1653

No Related Data.
© 2021 Moody’s Corporation, Moody’s Investors Service, Inc., Moody’s Analytics, Inc. and/or their licensors and affiliates (collectively, “MOODY’S”). All rights reserved.

CREDIT RATINGS ISSUED BY MOODY'S CREDIT RATINGS AFFILIATES ARE THEIR CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES, AND MATERIALS, PRODUCTS, SERVICES AND INFORMATION PUBLISHED BY MOODY’S (COLLECTIVELY, “PUBLICATIONS”) MAY INCLUDE SUCH CURRENT OPINIONS. MOODY’S DEFINES CREDIT RISK AS THE RISK THAT AN ENTITY MAY NOT MEET ITS CONTRACTUAL FINANCIAL OBLIGATIONS AS THEY COME DUE AND ANY ESTIMATED FINANCIAL LOSS IN THE EVENT OF DEFAULT OR IMPAIRMENT. SEE APPLICABLE MOODY’S RATING SYMBOLS AND DEFINITIONS PUBLICATION FOR INFORMATION ON THE TYPES OF CONTRACTUAL FINANCIAL OBLIGATIONS ADDRESSED BY MOODY’S CREDIT RATINGS. CREDIT RATINGS DO NOT ADDRESS ANY OTHER RISK, INCLUDING BUT NOT LIMITED TO: LIQUIDITY RISK, MARKET VALUE RISK, OR PRICE VOLATILITY. CREDIT RATINGS, NON-CREDIT ASSESSMENTS (“ASSESSMENTS”), AND OTHER OPINIONS INCLUDED IN MOODY’S PUBLICATIONS ARE NOT STATEMENTS OF CURRENT OR HISTORICAL FACT. MOODY’S PUBLICATIONS MAY ALSO INCLUDE QUANTITATIVE MODEL-BASED ESTIMATES OF CREDIT RISK AND RELATED OPINIONS OR COMMENTARY PUBLISHED BY MOODY’S ANALYTICS, INC. AND/OR ITS AFFILIATES. MOODY’S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND PUBLICATIONS DO NOT CONSTITUTE OR PROVIDE INVESTMENT OR FINANCIAL ADVICE, AND MOODY’S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND PUBLICATIONS ARE NOT AND DO NOT PROVIDE RECOMMENDATIONS TO PURCHASE, SELL, OR HOLD PARTICULAR SECURITIES. MOODY’S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND PUBLICATIONS DO NOT COMMENT ON THE SUITABILITY OF AN INVESTMENT FOR ANY PARTICULAR INVESTOR. MOODY’S ISSUES ITS CREDIT RATINGS, ASSESSMENTS AND OTHER OPINIONS AND PUBLISHES ITS PUBLICATIONS WITH THE EXPECTATION AND UNDERSTANDING THAT EACH INVESTOR WILL, WITH DUE CARE, MAKE ITS OWN STUDY AND EVALUATION OF EACH SECURITY THAT IS UNDER CONSIDERATION FOR PURCHASE, HOLDING, OR SALE.

MOODY’S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS, AND PUBLICATIONS ARE NOT INTENDED FOR USE BY RETAIL INVESTORS AND IT WOULD BE RECKLESS AND INAPPROPRIATE FOR RETAIL INVESTORS TO USE MOODY’S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS OR PUBLICATIONS WHEN MAKING AN INVESTMENT DECISION. IF IN DOUBT YOU SHOULD CONTACT YOUR FINANCIAL OR OTHER PROFESSIONAL ADVISER.

ALL INFORMATION CONTAINED HEREIN IS PROTECTED BY LAW, INCLUDING BUT NOT LIMITED TO, COPYRIGHT LAW, AND NONE OF SUCH INFORMATION MAY BE COPIED OR OTHERWISE REPRODUCED, REPACKAGED, FURTHER TRANSMITTED, TRANSFERRED, DISSEMINATED, REDISTRIBUTED OR RESOLD, OR STORED FOR SUBSEQUENT USE FOR ANY SUCH PURPOSE, IN WHOLE OR IN PART, IN ANY FORM OR MANNER OR BY ANY MEANS WHATSOEVER, BY ANY PERSON WITHOUT MOODY’S PRIOR WRITTEN CONSENT.

MOODY’S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND PUBLICATIONS ARE NOT INTENDED FOR USE BY ANY PERSON AS A BENCHMARK AS THAT TERM IS DEFINED FOR REGULATORY PURPOSES AND MUST NOT BE USED IN ANY WAY THAT COULD RESULT IN THEM BEING CONSIDERED A BENCHMARK.

All information contained herein is obtained by MOODY’S from sources believed by it to be accurate and reliable. Because of the possibility of human or mechanical error as well as other factors, however, all information contained herein is provided “AS IS” without warranty of any kind. MOODY'S adopts all necessary measures so that the information it uses in assigning a credit rating is of sufficient quality and from sources MOODY'S considers to be reliable including, when appropriate, independent third-party sources. However, MOODY’S is not an auditor and cannot in every instance independently verify or validate information received in the rating process or in preparing its Publications.

To the extent permitted by law, MOODY’S and its directors, officers, employees, agents, representatives, licensors and suppliers disclaim liability to any person or entity for any indirect, special, consequential, or incidental losses or damages whatsoever arising from or in connection with the information contained herein or the use of or inability to use any such information, even if MOODY’S or any of its directors, officers, employees, agents, representatives, licensors or suppliers is advised in advance of the possibility of such losses or damages, including but not limited to: (a) any loss of present or prospective profits or (b) any loss or damage arising where the relevant financial instrument is not the subject of a particular credit rating assigned by MOODY’S.

To the extent permitted by law, MOODY’S and its directors, officers, employees, agents, representatives, licensors and suppliers disclaim liability for any direct or compensatory losses or damages caused to any person or entity, including but not limited to by any negligence (but excluding fraud, willful misconduct or any other type of liability that, for the avoidance of doubt, by law cannot be excluded) on the part of, or any contingency within or beyond the control of, MOODY’S or any of its directors, officers, employees, agents, representatives, licensors or suppliers, arising from or in connection with the information contained herein or the use of or inability to use any such information.

NO WARRANTY, EXPRESS OR IMPLIED, AS TO THE ACCURACY, TIMELINESS, COMPLETENESS, MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OF ANY CREDIT RATING, ASSESSMENT, OTHER OPINION OR INFORMATION IS GIVEN OR MADE BY MOODY’S IN ANY FORM OR MANNER WHATSOEVER.

Moody’s Investors Service, Inc., a wholly-owned credit rating agency subsidiary of Moody’s Corporation (“MCO”), hereby discloses that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by Moody’s Investors Service, Inc. have, prior to assignment of any credit rating, agreed to pay to Moody’s Investors Service, Inc. for credit ratings opinions and services rendered by it fees ranging from $1,000 to approximately $5,000,000. MCO and Moody’s Investors Service also maintain policies and procedures to address the independence of Moody’s Investors Service credit ratings and credit rating processes. Information regarding certain affiliations that may exist between directors of MCO and rated entities, and between entities who hold credit ratings from Moody’s Investors Service and have also publicly reported to the SEC an ownership interest in MCO of more than 5%, is posted annually at www.moodys.com under the heading “Investor Relations — Corporate Governance — Director and Shareholder Affiliation Policy.”

Additional terms for Australia only: Any publication into Australia of this document is pursuant to the Australian Financial Services License of MOODY’S affiliate, Moody’s Investors Service Pty Limited ABN 61 003 399 657AFSL 336969 and/or Moody’s Analytics Australia Pty Ltd ABN 94 105 136 972 AFSL 383569 (as applicable). This document is intended to be provided only to “wholesale clients” within the meaning of section 761G of the Corporations Act 2001. By continuing to access this document from within Australia, you represent to MOODY’S that you are, or are accessing the document as a representative of, a “wholesale client” and that neither you nor the entity you represent will directly or indirectly disseminate this document or its contents to “retail clients” within the meaning of section 761G of the Corporations Act 2001. MOODY’S credit rating is an opinion as to the creditworthiness of a debt obligation of the issuer, not on the equity securities of the issuer or any form of security that is available to retail investors.

Additional terms for Japan only: Moody's Japan K.K. (“MJKK”) is a wholly-owned credit rating agency subsidiary of Moody's Group Japan G.K., which is wholly-owned by Moody’s Overseas Holdings Inc., a wholly-owned subsidiary of MCO. Moody’s SF Japan K.K. (“MSFJ”) is a wholly-owned credit rating agency subsidiary of MJKK. MSFJ is not a Nationally Recognized Statistical Rating Organization (“NRSRO”). Therefore, credit ratings assigned by MSFJ are Non-NRSRO Credit Ratings. Non-NRSRO Credit Ratings are assigned by an entity that is not a NRSRO and, consequently, the rated obligation will not qualify for certain types of treatment under U.S. laws. MJKK and MSFJ are credit rating agencies registered with the Japan Financial Services Agency and their registration numbers are FSA Commissioner (Ratings) No. 2 and 3 respectively.

MJKK or MSFJ (as applicable) hereby disclose that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by MJKK or MSFJ (as applicable) have, prior to assignment of any credit rating, agreed to pay to MJKK or MSFJ (as applicable) for credit ratings opinions and services rendered by it fees ranging from JPY125,000 to approximately JPY550,000,000.

MJKK and MSFJ also maintain policies and procedures to address Japanese regulatory requirements.

Moodys.com