Islamic Rating Agency To Establish In Dubai

by Lorys Charalambous, Tax-News.com, Cyprus

31 July 2006

Islamic International Rating Agency (IIRA), the leading Islamic rating agency in the Middle East, has announced that it will establish a presence at the Dubai International Financial Centre (DIFC).

Sponsored by several leading banks, financial institutions and rating agencies, IIRA started operations in July 2005 and was recently registered by the DIFC Authority.

Chief Executive Officer of IIRA, Jamal Abbas Zaidi, commented:

“It is essential for us to have a presence at the region’s leading financial centre. IIRA has developed comprehensive and in-depth rating methodologies that enable us to rigorously analyse qualitative and quantitative factors that are likely to affect the creditworthiness of issuers."

“Sustained growth of Islamic capital markets and Shari’ah-compliant financing is dependent on the independent evaluation of issuers. IIRA provides lenders and investors with a legitimate alternative to international agencies, using its intimate understanding of the region to provide cost-effective and insightful rating evaluations,” he added.

IIRA offers sovereign ratings, credit ratings, Shari’ah quality ratings and corporate governance ratings. Sovereign ratings and credit ratings assess the likelihood that an entity will repay its debt obligations in a timely manner. Shari’a quality ratings evaluate the level of compliance with Shari’ah principles. Corporate governance ratings consider the practices of an entity to assess the demarcation of stakeholders’ rights and responsibilities, as well as compliance with prevailing decision-making rules and procedures.

Dr. Omar Bin Sulaiman, Governor of the DIFC Authority, observed that:

“The DIFC aims to be the centre of excellence for Islamic finance and having an Islamic credit rating agency is a major step in the right direction. Islamic finance has gained international recognition as one of the fastest growing sectors in the financial services industry."

"In order to encourage more Islamic transactions, it is crucial to be able to provide an independent assessment of compliance based on Shari’ah law. We very much look forward to working with IIRA supporting new standards across the region."

IIRA is fully independent in its rating decisions. It is not influenced by any external political or economic pressures, and neither the agency nor its shareholders have political affiliations. The individual assessments made by IIRA will be available to both domestic and foreign institutions on equal terms, according to common practice in the rating industry.

It discloses its assessment methodologies, the definition of default, the time horizon for which various ratings are applicable and the meaning of each rating in the rating scales. The required resources are gathered to carry out high quality credit assessments, including databases, IT infrastructure and qualified and professional analysts and consultants with relevant experience.

IIRA is fast gaining credibility in the market, with many independent parties showing strong interest in subscribing to credit assessment reports and services. Its mission is to help issuers by revealing their strengths and weaknesses, enabling them to focus on improving their failings, as well seeking to help investors by providing an effective tool to make informed investment decisions.

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