08.12.2010, Jeddah, KSA – Fitch Ratings, one of the three leading credit rating agencies in the world announced that it has affirmed the Islamic Development Bank (IDB) Long-Term Issuer Default Rating (IDR) at ‘AAA’ and its Short-Term IDR at ‘F1+’ with a Stable Outlook for the Bank’s Long-Term IDR.
The rating primarily highlights IDB Group’s strong capitalization, low leverage and the strong support it enjoys from its member states whose willingness to provide support for the IDB Group has been well demonstrated by continuous capital increases.
According to Fitch Ratings Agency, financing by IDB has been predominantly extended to sovereign or sovereign-guaranteed entities accounted for more than 87.8% of the Bank’s non-equity operations by the end of 1430H (2009G) mitigating its exposure to credit risk by strict country and counterparty limits and by preferred creditor status. As a result the Fitch Ratings Agency states, “impaired operations of the Bank only accounted for 2.0% of gross non-equity operations at end-1430H (2009G) and were adequately provisioned.”
Elsewhere in its statement it referred to the Bank’s ‘limited credit risk on liquid assets which has enabled the IDB to go through the global financial crisis with no loss on liquid assets’ asserting that the institution’s equity investment risk is also limited by individual ceilings. Furthermore, Fitch explains that the Islamic Development Bank maintains a strong intrinsic equity base with equity accounting for 67.5 percent of its assets at end-1430H (2009G) and unlike other Multilateral Development Banks (MDBs) the IDB’s leverage is very low as the Bank is subject to a strict debt/equity ratio limit of 50 percent.
“The IDB has an ambitious growth plan for 1431-1433H (2010-2012G)” states Fitch Ratings Agency asserting that it expects “the Bank’s capitalization to remain strong thanks to a further capital increase in 1431H (2010G) which will strengthen equity.”
For the past nine consecutive years, the Islamic Development Bank has earned the highest ratings by the three leading rating agencies in the world, namely; Fitch Ratings, Moody’s and S&P.