Lahore –– The Pakistan Credit Rating Agency (PACRA) has maintained long-term and short-term entity ratings of Pakistan National Shipping Corporation (PNSC) at “AA-” (Double A minus), and “A1+” (A One Plus), respectively. The ratings denote a very low expectation of credit risk emanating from a very strong capacity for timely payment of financial commitments.
The ratings reflect PNSC’s sovereign ownership structure – majority (~80%) owned by the Government of Pakistan (GoP) – and its strategic importance. The ratings incorporate the corporation’s strong risk absorption capacity, emanating from a robust equity base and healthy liquidity position.
Meanwhile, the monopolist position of PNSC, as the only domestic shipping company, and long-term nature of its contracts insulate the corporation to a certain degree from the inherent cyclical nature of the shipping industry. The ratings remain dependent upon the successful implementation of the corporation’s fleet expansion/replacement plan and subsequent higher revenues, translating into strong cash flow generation.
Adverse business developments, resulting in lower freight and charter revenues and/or excessive leveraging, impacting the financial profile, would have negative rating implications. In this regard, management’s ability to proactively manage the corporation’s financial obligations is important for the ratings. Meanwhile, upholding a strong governance framework would be critical.