Lahore: The Pakistan Credit Rating Agency (PACRA) has assigned the preliminary rating of ‘A+’ (Single A Plus) to structured privately placed TFCs of PKR 1,150mln to be issued by City Schools (Pvt.) Limited (CSPL). This rating indicates a low expectation of credit risk emanating from a strong capacity for timely payment of financial commitments.
The rating primarily draws its strength from the security structure of the instrument. This includes, inter alia, first exclusive charge over dividend receivables from two operational independent power producers – IPPs (~700MW) and assignment of the same in favour of the Agent Bank, and first equitable mortgage over land and building of City Schools with 20% margin.
Although the instrument remains exposed to timing mismatch, it would be cushioned through, among other things, considerable dividend retention after debt repayment. Nevertheless, the rating incorporates challenges ensuing from continuing tough socio-economic environment beset particularly with circular debt in energy chain, adding uncertainty to timeliness of cash flows to IPPs.
The rating is dependent on the continued compliance with the predefined security structure of the instrument. Moreover, any significant deterioration in the performance of the IPPs, impacting the projected dividend stream, would have negative implications for the rating.
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