Moody's Investors Service has assigned a B3 rating to the Sukuk which is to be issued by the government of Maldives this year. This Sukuk has been backed by Dharumavantha Hospital.
Moody’s has stated that the Sukuk issued by the special purpose vehicle Maldives Sukuk Issuance Limited rates 3B negative on the Moody’s Investor Scale. They also stated that hence the government of Maldives is solely responsible for the Sukuk, they issued a rating equal to the sovereign rating of Maldives.
The government has previously announced that they plan on issuing a USD 300 million Sukuk, but did not reveal on how the govt intends to use the proceeds from the Sukuk. Moody's Investors Service stated that the proceeds from the Sukuk are to be used to buy back a bond that matures in June 2022 and to finance developmental projects of the government.
This Sukuk is being issued in partnership with Islamic Corporation for the Development of Private Sector (ICD). The government has already created a Special Purpose Vehicle to carry out the transaction. In layman’s terms the vehicle refers to a company with legal and governing authority to carry out the sale. To issue the 300 million US Dollar Sukuk, you would need to transfer an asset valued over 51 percent of the Sukuk to the SPV. Dharumavantha Hospital is being used as said asset.
The Sukuk will be issued to the foreign investors through this SPV. The funds obtained through that transaction will be used to acquire Dharumavantha Hospital. The SPV will then lease Dharumavantha Hospital to the government. The government will then pay the lease to the SPV, and it will be used to pay to the Sukuk holders. This will be considered as profit to the Sukuk holders. Once the Sukuk matures, the government will finance the re-purchasing of Dharumavantha Hospital. The government will not lose control of the hospital as long as they make timely payments to the Sukuk holders. However, if the government defaults on the payments, then circumstances might change.