Pakistan Credit Rating Agency Limited Assigns Final Rating of “AA” To the Proposed Secured, Listed TFCS by Karachi Electric Supply Company Limited

Lahore, June 05, 2012 (PPI-OT): The Pakistan Credit Rating Agency (PACRA) has assigned a rating of ‘AA’ (Double A) to the proposed secured, listed TFCs of PKR 2,000mln (TFC I: PKR 300mln; TFC II: PKR 1,200mln; TFC III: PKR 500mln) being issued by Karachi Electric Supply Company Limited (KESC). This rating denotes a very low expectation of credit risk emanating from a very strong capacity for timely payment of financial commitments.

The rating primarily draws its strength from the security structure of the instrument. This includes, interalia, first parri passu charge with 1.2x minimum throughput of receivables from specific 250 corporate consumers and first pari passu charge with 1.2x minimum throughput of excess proceeds (after meeting certain pre-agreed financial obligations) entitled to KESC relating to consumer bills collections of 495specific entities.

The amounts so received would be directly deposited into Debt Payment Account (DPA), which will be gradually built over a period prior to each repayment date to avoid pressure on any single month. Scenario analysis depicts that cash flow coverages are expected to remain strong throughout the life of the instrument.

This structure has created a distinction in the instrument from the risks that the issuer is generally exposed to in the normal course of business. Nevertheless, volatile domestic socio-political environment may exert some pressure on the issuer to re-prioritize its obligations though its impact on the bond performance is expected to remain limited.

For more information, contact:
Hammad Rashid
Analyst
The Pakistan Credit Rating Agency Limited (PACRA)
Awami Complex, FB1, Usman Block New Garden Town,
Lahore – Pakistan
Tel: +9242 586 9504 -6
Fax: +9242 583 0425
Email: hammad.rashid@pacra.com
Web: www.pacra.com

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