S&P assigns 3 recovery to Damac Real Estate issues

S&P said it assigned a 3 recovery rating to sukuk trust certificates issued by Damac Real Estate Development Ltd. through two special purpose vehicles.

The issue includes $100 million of sukuk trust certificates due in 2017 issued by Alpha Star Holding II Ltd. and $650 million of sukuk trust certificates due in 2019 issued by Alpha Star Holding Ltd.

The 3 recovery rating reflects 50% to 70% expected default recovery.

S&P also said it affirmed the BB ratings on these instruments.

The senior unsecured trust certificates are standard for a sukuk issuance and include three financial maintenance covenants and certain non-financial covenants, the agency said.

In the hypothetical default scenario, S&P said it assumes a severe downturn in the United Arab Emirates' economy, which would reduce the group's property values and rental yields and lead to a payment default on the sukuk certificates.

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