Lahore: The Pakistan Credit Rating Agency (PACRA) has maintained the ratings of the asset-backed term finance certificates issue of PKR 700mln (Class A; 550mln; Class B: 150mln) by Financial Receivables Securitization Company Limited (FRSCL) at ‘A+’ (Single A Plus). The rating denotes a low expectation of credit risk emanating from a strong capacity for timely payment to the TFCs holders.
FRSCL’s ability to meet TFCs holder’s obligations is a function of management fee generated by securitized mutual funds of JS Investments Limited (JSIL). JSIL has experienced contraction in its assets under management (AUM) base including securitized funds. Conversion of one of the securitized funds into open-end led to a net redemption of above PKR 1bln.
This has constrained FRSCL’s ability to meet its financial obligations. However, the company is carrying considerable surplus funds in the form of TDR and cash balances. This would help the company to meet upcoming payments, which have started tapering off with the repayment of principal amounts.
JSIL’s success in averting the declining AUM is critical to continue enabling FRSCL fulfil its obligations from securitized cashflows. The management is confident that any further material decline is unlikely, and, lately, the industry has also shown restraint against further decline. Moreover, FRSCL can also exercise a put option on the originator (JSIL) for TFC Class ‘B’ Holders to meet the payment obligations, wherein JSIL intends to honour such call, if need arises.
For more information, contact:
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