Fitch assigns Pakistan's proposed USD Sukuk 'B-' rating

January 18, 2022 (MLN): Fitch Ratings has assigned Pakistan's proposed US-dollar sovereign global sukuk certificates, which will be issued through The Pakistan Global Sukuk Programme Company Limited, a 'B-' rating.

The Pakistan Global Sukuk Programme Company Limited is a legal entity in Pakistan and is the issuer and trustee of the sukuk, incorporated primarily for the purpose of participating in the sukuk transaction. It is wholly owned by Pakistan.

The rating is sensitive to any changes in Pakistan's Long-Term Foreign-Currency Issuer Default Rating (IDR), which Fitch affirmed at 'B-' with a stable outlook in May 2021, Fitch said.

The certificates' rating is driven solely by Pakistan's IDR. This reflects Fitch's view that a default of these senior unsecured obligations would reflect a default of Pakistan, in accordance with Fitch's rating definitions.

“We have not considered any underlying assets or collateral provided when assigning a rating to the sukuk, as we believe the issuer's ability to satisfy payments due on the certificates will ultimately depend on the Pakistan government satisfying its unsecured payment obligations to the issuer under the transaction documents described in the prospectus and other supplementary documents,” Fitch said.

In addition to the government's propensity to ensure repayment of the sukuk, Fitch believes the government would also be required to ensure full and timely repayment of The Pakistan Global Sukuk Programme Company Limited's obligations due to its various roles and obligations under the sukuk structure and documentation.

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