Dubai – Mubasher: Fitch Ratings has downgraded Emirates REIT's Long-Term Issuer Default Rating (IDR) to 'C' from 'B+' and the senior unsecured Sukuk trust certificates to 'C' from 'BB-'.
Emirates REIT has proposed to convert its existing $400 million unsecured Sukuk, due in December 2022, with a new Sukuk, which will be due in December 2024 and will have first-ranking security over the company's properties valued at around $280 million, according to a recent press release.
Distributions for the current Sukuk are due in June and December 2021 at a rate of 5.125% rate, while the proposed Sukuk's first distribution worth $10.2 million will accrue and be paid at maturity.
Hence, Fitch sees the transaction as a Distressed Debt Exchange (DDE) under its corporate rating criteria due to the cash coupon payments, which will be deferred for the first year and paid at maturity, and the extension of the maturity date by two years.
Noteworthy to mention, sources have recently told Reuters that a group of creditors has appointed financial adviser Rothschild and law firm Clifford Chance to oppose the terms of Emirates REIT's proposal to convert existing unsecured Sukuk into new secured instruments.
