Moody’s Investors Service, (“Moody’s”) has assigned a provisional (P)A3 rating to the proposed OMR50 million equivalent sukuk notes to be issued by First Issue S.A.O.C., (“First Issue”), a 99% owned subsidiary of Oman Telecommunications Company S.A.O.G. (“Omantel”, A3 stable).
The outlook on rating is stable. Moody’s issues a provisional rating in advance of the final sale of securities. Upon a conclusive review of the transaction documentation and associated legal opinions, Moody’s will endeavour to assign a definitive rating to the notes. A definitive rating may differ from a provisional rating.
RATINGS RATIONALE
The (P)A3 rating assigned to the trust certificates is at the same level as the issuer ratings of Omantel, as the sukuk certificate holders will (i) effectively be exposed to Omantel’s senior unsecured credit risk; (ii) not be exposed to the risk of performance of the trust assets relating to the certificates; (iii) will not have any preferential claim or recourse over the trust assets, or rights to cause any sale or disposition of the trust assets except as expressly provided under the transaction documents; and (iv) only have rights against Omantel, ranking pari passu with other senior unsecured obligations as provided in the transaction documents.
Moody’s also notes that its sukuk rating does not express an opinion on the structure’s compliance with Shari’a law, and for this it refers to the pronouncement provided by the Shari’a advisers for the program.
The proceeds of the sukuk certificates will be used by First Issue to acquire an ownership interest in assets comprising airtime vouchers. The assets will be managed by Omantel as distributor, seller and obligor. Omantel will sell the trust assets against the relevant periodic distribution amounts due for each series. If there is a shortfall between the amounts collected from the asset sales and the aggregate periodic distribution amounts due, then Omantel, as obligor, may pay further amounts to remedy such shortfall to avoid a dissolution event.
First Issue is 99% owned by Omantel with Oman Data Park LLC and Omania E-Commerce LLC having a 0.5% shareholding each. Omantel owns 60% in the data service provider, Oman Data Park LLC, with 4Trust LLC owning the remaining 40% in the joint venture. Omania E-Commerce LLC is 100% owned by Oman Data Park LLC.
The transaction documents and certificates of First Issue, incorporated in Oman, will be governed under Omani law where all payments in respect of the certificates have been agreed to be made free and clear of tax. The OMR50 million equivalent in certificates issued will comprise both Omani Rials and US dollars.
Omantel will use the proceeds from the issue of the certificates for the construction of its new head office building and for other corporate purposes.
Omantel will issue the proposed notes through First Issue. However, payment obligations under the various documents will be direct, unconditional, unsecured and general obligations of Omantel and rank at least pari passu with all other unsecured, unsubordinated and general obligations of the company.
At maturity or upon a dissolution event, Omantel is required, by means of the purchase undertaking, to fully repay — including any unpaid and accrued periodic distribution amount — the aggregate face value of the sukuk.
The principal methodology used in this rating was Global Telecommunications Industry published in December 2010. Other methodologies used include the Government-Related Issuers methodology published in October 2014. Please see the Credit Policy page on www.moodys.com for a copy of these methodologies.
The Local Market analyst for this rating is Douglas Rowlings, 971-4-237-9543.
Oman Telecommunications Company S.A.O.G. (Omantel) is the incumbent telecommunications service provider in the Sultanate of Oman (A1 negative). Omantel is predominantly active in Oman from which it derives 98% of its revenues and where it is the leading service provider, primarily competing with Nawras (a 55% subsidiary of Ooredoo Q.S.C.; A2 negative). In 2008 the company acquired a 57% stake in WorldCall, a telecom operator in Pakistan. Omantel reported revenues of OMR 507 million ($1.3 billion) for the last twelve months ended 30 September 2015.
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.