QIB announced on the Doha Stock Exchange that its exposure to Dubai World is QR 54 million (US$ 14.8 million) reflecting participation in an "asset backed" Sukuk issued by Dubai World with maturity 2017.
At 30 September 2009, QIB had roughly QR7.8 billion in shareholders' equity. This exposure is then not problematic.
Three comments.
- I believe this may be the Dubai Ports 6.25% Sukuk. If so, this is probably a better obligation to hold than say Nakheel. It's surprising that QIB wasn't more specific.
- As we've seen from some of our forays into Sukuk analysis, there is not always recourse to the underlying assets. So the term asset backed should not be read to imply that necessarily there is collateral.
- The comment about financial impact means that QIB is taking changes in value in the sukuk directly to its equity in the "fair value reserve" account there. Thus, these changes do not pass through its income statement.
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