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Moody's Investors Service has affirmed Masraf Al Rayan's (MAR) A2/Prime-1 issuer ratings and baa3 baseline credit assessment (BCA) and adjusted BCA. At the same time, Moody's changed the outlook on the bank's long term issuer ratings to positive from stable. The change in the outlook to positive from stable reflects the ongoing improvements in MAR's business and geographic diversification, including the growth and transition to profitability of its recently acquired subsidiary Al Rayan Bank PLC based in UK. Further underpinning Moody's view on the outlook is Qatar's considerable economic strength, with robust growth prospects driven by the significant wealth and resources of the country, despite lower oil prices.

Moody's Investors Service has affirmed Masraf Al Rayan's (MAR) A2/Prime-1 issuer ratings and baa3 baseline credit assessment (BCA) and adjusted BCA. At the same time, Moody's changed the outlook on the bank's long term issuer ratings to positive from stable. Moody's affirmation reflects MAR's continued strong core financial fundamentals with (1) consistently strong asset quality performance, (2) strong and stable profitability and (3) solid capital buffers. The change in the outlook to positive from stable reflects the ongoing improvements in MAR's business and geographic diversification. Further underpinning Moody's view on the outlook is Qatar's considerable economic strength.

Moody's Investors Service says the outlook on Indonesia's (Baa3 stable) banking system remains stable, reflecting an expectation that the country's banks will withstand a challenging operating environment owing to their strong buffers. Nonperforming loans will likely rise, given slowing economic growth, nonetheless, the banks are well-positioned to withstand any deterioration in asset quality and will maintain strong capital levels. Moody's conclusions were contained in its just-released "Banking System Outlook: Indonesia", which expresses Moody's view of how bank creditworthiness will evolve in this system over the next 12-18 months. The report looks at the banking system in the five categories of operating environment; asset quality and capital; funding and liquidity; profitability and efficiency; and system support.

Moody's Investors Service has today upgraded to Baa1 from Baa2 the insurance financial strength rating (IFSR) of the Qatar Islamic Insurance Company ("QIIC"). The rating carries a stable outlook. The rating upgrade for QIIC reflects (i) the company's improved and extremely strong capitalisation in relation to insurance risk; and (ii) its sustained strong profitability both in terms of underwriting profit and of bottom line. Nonetheless, Moody's added that QIIC maintains a significant level of investment risk, as QIIC invests predominantly in Qatari equity and property markets, translating to a high risk assets ratio. Furthermore, QIIC's insurance risk remains relatively concentrated to Qatar. The outlook is stable reflecting the expectation that the improvements in QIIC's capitalization will be maintained.

Moody's Investors Service says that the Indonesian government's (Baa3 stable) Islamic finance roadmap will encourage consolidation among smaller Islamic banks in the country, and foster the development of a larger domestic Sukuk market. The consolidation of state-owned and commercial Islamic banks will increase the size of the banks' capital bases, improve cost efficiencies, and allow increased underwriting in the corporate and infrastructure sectors. Moody's report points out that Islamic banks operate less extensive branch networks when compared to conventional banks, and their capital bases are smaller. Their riskier customer base has led to non-performing financing ratios that are consistently higher than the comparable non-performing loan ratios at conventional banks.

Moody's Investors Service has today upgraded Qatar International Islamic Bank's (QIIB) long term and short term issuer rating to A2/Prime-1 from A3/Prime-2, and changed baseline credit assessment (BCA) and adj. BCA to baa3 from ba1. Moody's also changed the outlook on the bank's long term ratings to stable. At the same time, Moody's assigned a new Counterparty Risk Assessment of A1 to QIIB. Moody's rating action reflects QIIB's improved and consistently strong asset quality performance and its solid capitalisation, liquidity and funding profile. These strengths are moderated by high borrower and sector concentrations, risk management challenges stemming from rapid financing growth and margin pressures driving a modest decline in profitability.

Moody's Investors Service has assigned definitive A3 senior unsecured ratings to the US dollar trust certificates issued by Malaysia Sovereign Sukuk Bhd, a special purpose vehicle established by the government. Moody's said on Wednesday its definitive ratings for these debt obligations confirmed the provisional ratings assigned on April 6. The A3 rating assigned to the sukuk is at the same level as the long-term local-currency and foreign-currency issuer ratings of the Government of Malaysia. The proceeds of the sukuk will be used by the issuer to invest in the purchase of an asset pool consisting of Ijara assets, the right to participate in the provision of transportation services in Malaysia, and Shariah-compliant commodities.

Moody's Investors Service has today downgraded to Baa3/Prime-3 from Baa2/Prime-2 the deposit, issuer and senior unsecured debt ratings of three Bahraini Banks: BBK B.S.C., National Bank of Bahrain BSC, and Bahrain Development Bank B.S.C. Concurrently, Moody's downgraded the baseline credit assessments (BCAs) of BBK and National Bank of Bahrain to ba1 from baa3. These actions follow Moody's downgrade of Bahrain's government bond ratings to Baa3 from Baa2 on 16 April 2015 and reflect (1) the government's reduced capacity of support, and (2) the challenges in view of weaker economic growth. The negative outlooks assigned to the Baa3 long-term ratings of the three banks are aligned with the negative outlook on the government's Baa3 bond rating.

Moody's Investors Service has assigned a provisional (P)A3 senior unsecured (foreign and local currency) MTN rating to the $3 billion Trust Certificates Issuance Program of SIB Sukuk Company III Limited, a special purpose vehicle incorporated in the Cayman Islands by Sharjah Islamic Bank PJSC (SIB). The outlook on the issuer is stable. The (P) A3 rating assigned to the Sukuk trust certificates is at the same level as the A3 foreign and local currency issuer rating of SIB. The proceeds of each issue of Certificates will be used by the Issuer to acquire an ownership interest in a portfolio of assets. Upon a conclusive review of the transaction and associated documentation, Moody's will endeavour to assign definitive ratings to any issue of Certificates.

The 2015 outlook for GCC banks is stable, but it is negative for those in the rest of the MENA region, says Moody's Investors Service. The stable outlook for GCC banks is driven by strong operating conditions coupled with expansionary fiscal policies and continued infrastructure spending, which remain supportive of credit growth. However, declining oil prices if prolonged at these levels will reduce fiscal surpluses, affect economic confidence and moderate growth expectations. The negative outlook for the rest of the MENA region reflects more subdued credit growth and unsettled domestic environments, which translate into high credit risks. In addition the high exposure to low-rated government securities links non-GCC banks' credit profiles to their respective sovereigns.

According to the Qatar Islamic Insurance Company (QIIC) the ratings agency Moody's Investors Service has affirmed its insurance financial strength rating (IFSR) 'Baa2'. It changed from “Stable” to “Positive”. This is based on the ongoing strong performance. Moody’s here see the reflection of the very strong capitalization in relation to the insurance risk. A sustained strong profitability on the underwriting average Return on Capital and the average combined Ratio was another reason. QIIC is one of the world’s leading Islamic insurance companies. The company recorded a 3 percent increase in gross contributions in 2013. This was largely driven by an increase in General Accident, Takaful Life and Health business.

Moody's Investors Service has confirmed Bahrain Islamic Bank's (BIsB) supported issuer ratings at Ba3, with a negative outlook, and affirmed its short term ratings at Not Prime. At the same time, Moody's downgraded BIsB's standalone bank financial strength rating (BFSR) by one notch to E from E+, equivalent to a baseline credit assessment (BCA) of caa1 from b3 previously. Moody's downgrade of the standalone credit profile reflects BIsB's still thin and vulnerable capital base, given the continued lack of clarity surrounding the timing, nature and amount of the anticipated capital injection. These weaknesses are partially moderated by BIsB's solid funding and liquidity position.The negative outlook on the supported issuer rating is aligned with negative outlook on the ratings of the Government of Bahrain, the ultimate provider of systemic support to the bank.

Moody's Investors Service has upgraded by one notch the global foreign and local-currency deposit ratings of Kuwait-based Boubyan Bank (Boubyan) to Baa1 from Baa2. At the same time, Moody's has upgraded Boubyan's standalone bank financial strength rating (BFSR) to D+ from D, equivalent to ba1 baseline credit assessment (BCA) from ba2. All ratings assigned to Boubyan carry a stable outlook. Moody's rating upgrade primarily reflects the strengthening of asset-quality and coverage metrics and improvement in capitalisation levels. However, these strengths are moderated by high concentration risks and challenges stemming from rapid growth.

Moody's Investors Service has today taken actions on National Bank of Bahrain, BBK, BMI Bank and Bahrain Islamic Bank. The ratings agency has confirmed that National Bank of Bahrain (NBB) and BBK received Baa2/Prime-2 deposit and senior debt ratings, with a negative outlook. Regarding BMI Bank, Moody's has extended the review for downgrade on the bank's Ba1 deposit rating, and affirmed the bank's standalone E+ bank financial strength rating (BFSR) with a stable outlook, equivalent to a baseline credit assessment of b1. In addition to these actions, Moody's has also extended the review for downgrade on all the ratings of Bahrain Islamic Bank (BIsB) to reflect its extensive capital needs and ongoing uncertainties around the recapitalisation of the bank.

Moody's Investors Service said it has placed four Bahraini banks - National Bank of Bahrain (NBB), BBK, BMI Bank and Bahrain Islamic Bank (BIsB) - on review for possible downgrade of its deposit, issuer and senior debt ratings. As part of the same rating action, Moody's has also placed on review for downgrade the standalone bank financial strength rating (BFSR) of BIsB. Moody's decision comes following the potential weakening in the sovereign's capacity to provide support to the banks, as signaled by the agency's decision to place the Baa1 Bahraini government bond rating on review for possible downgrade. The sovereign review was prompted by the fiscal implications of Bahrain's high and rising break-even oil price; the outlook for lower trend economic growth in the country over the medium term and the impact of a low-growth, high government expenditure and weaker oil price scenario on Bahrain's long-term debt sustainability.

According to a new special report published by Moody's Investors Service, the Saudi sukuk market will continue to grow over the next 12-18 months. Strong sukuk issuance has continued in 2013, with SR 11.6 billion already issued during Q1, leading the rating agency to expect that 2013 sukuk issuance will surpass 2012 levels. With limited investment options available, IFIs tend to maintain higher levels of very low-yielding cash and Islamic interbank placements. A larger sukuk market would facilitate liquidity management through a pool of higher-yielding Shariah-compliant securities and offer a profitability boost to local IFIs. Moody's says that the record issuance is being driven by strong investor demand; increased financing opportunities to fund the country's large-scale infrastructure projects; and a developing yield curve following the sovereign-guaranteed benchmark sukuk issuance by the General Authority of Civil Aviation in early 2012.

Moody's Investors Service has downgraded Kuwait Finance House's (KFH) long term ratings by one notch to A1 from Aa3. Moody's also downgraded KFH's baseline credit assessment (BCA) and bank financial strength rating (BFSR) by two notches to ba1/D+ from baa2/C- respectively. The Prime-1 short term rating was confirmed. All ratings assigned to KFH carry a negative outlook. The rating actions reflect (1) continued asset quality pressures (2) an increasing reliance on volatile investment income and (3) the current organisational complexity and overall risk profile inconsistent with global peers. The rating action concludes the review for downgrade initiated for Kuwait Finance House on 7 November 2012.

Kuwaiti T'azur Takaful Insurance Company has been assigned a first-time Ba1 insurance financial strength rating (IFSR) with a stable rating outlook by Moody's Investors Service. The rating is a reflection of the company's good market position within the domestic Takaful market. Its market share is about 8% which puts the company on the 5th position in terms of Takaful contributions. In the last two years T'azur has been growing rapidly - with growth rates of 44% in average.

Moody's Investors Service reaffirmed Islamic Development Bank for the sixth consecutive year "Aaa" long-term and P-1 short-term foreign currency issuer rating with a "stable" outlook.
In Moody's oppinion, IDB reflects the presence of strong shareholder support, a high level of liquidity, the tested preferred creditor status and a low level of debt partly because of the Islamic (asset-backed) nature of its operations that makes it unique among MDB's.

The Jeddah-based Islamic Development Bank (IDB) is gearing up for its latest sukuk offering under its Medium Term Note (MTN) or Trust Certificate Issuance Program. The IDB, according to Mohamed Tariq, senior adviser to the President Ahmad Mohamed Ali, was poised to go to the international financial markets in September this year. In Kuala Lumpur last week, Abdul Aziz Al-Hinai, vice president, finance, IDB, confirmed that the IDB plans to go to the market in the last quarter of 2010. Another international rating agency, Moody's Investors Service, last month had already reaffirmed for a fifth consecutive year the Islamic Development Bank's Aaa long term and P-1 short term foreign currency issuer rating with a stable outlook. Moody's stated that the IDB's rating is strongly supported by the commitment of its member countries, and highlighted that the capital base of the bank is strong, its operational assets continue to perform well, it has a high level of liquidity and very low level of debt. Moody's concluded that the bank's risk profile is likely to remain healthy over the medium term.