Press Release
Ratings of K-Electric Limited
Karachi, February 25, 2019: VIS has assigned entity rating of ‘AA/A1’ (Double A/A One) to KE. Ratings have been placed on ‘Rating Watch-Developing’ status owing to pending notification of Company’s Multi Year Tariff (MYT). Furthermore, KE has received fresh public announcement of intention to acquire 66.4% stake from Shanghai Electric Power (SEP) on 24th December 2018. Financial profile and ownership structure of SEP along with expected synergies in various business and operational areas will have positive implications for KE. The rating assigned to the Sukuk incorporates structural features of the Sukuk.
The assigned ratings recognize the strategic importance of KE, a vertically integrated utility company, that has exclusive distribution rights in its service area i.e. Karachi and adjoining areas of interior Sind and Baluchistan. Business risk profile draws support from growing demand for electricity and continuous improvement across various operational metrics including reduction in transmission & distribution losses. Overall financial profile remains sound. However, gearing levels will increase and coverage of the outstanding debt will decline as the Company forges ahead with its investment plans; the same is expected to improve once increase in cash flows materializes. VIS expects debt servicing to remain adequate over the rating horizon.
For further information on this rating announcement, please contact the undersigned (Ext: 201) at 92-21-35311861-70 or fax to 92-21-35311873.
Javed Callea
Advisor
Applicable Rating Criteria: Industrial Corporate (Oct 2003)
http://www.vis.com.pk/images/IndustrialCorp.pdf
Rating The Issue (September 2014)
http://www.vis.com.pk/Images/criteria_instrument.pdf