Press Release
Ratings of K-Electric Limited- Sukuk 4 and Sukuk 5
Karachi, April 29, 2022: VIS Credit Rating Company Ltd. has reaffirmed the instrument rating of ‘AA+’ (Double A Plus) assigned to K-Electric Limited’s (KE) Rs. 22 billion Sukuk (Sukuk 4) and Rs. 25 billion Sukuk (Sukuk 5). Outlook on the assigned ratings is ‘Stable’. The previous rating action on Sukuk 4 and Sukuk 5 were announced on July 26, 2021 and April 28, 2021, respectively.
Sukuk Ratings incorporate the Master Collection Account (MCA) mechanism in place. The company routes collections from specific bank collection account(s) into the MCA. The account on a monthly basis retains the required amount of funds (one-third of the quarterly installment) for payment on due date. The routing arrangement includes undertaking from KE to cover any shortfall in the debt servicing amount. Sizeable and growing cash flows that are being routed through MCA is a key rating strength and provides strong coverage for debt payments being undertaken through the MCA.
The assigned rating 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 Sindh and Balochistan. Business risk profile draws support from growing demand for electricity and continuous improvement across various operational metrics. Revenues & profitability indicators have depicted improvement post Covid-19 revival in overall economy. Continuity in improvement in various operational performance metrics is considered important from a ratings perspective.
For further information on this rating announcement, please contact Ms. Asfia Aziz or the undersigned (Ext. 306) at 021-35311861-70 or email at info@vis.com.pk.
Faryal Ahmed Faheem
Deputy CEO
Industrial Corporates - August 2021
https://docs.vis.com.pk/docs/CorporateMethodology202108.pdf
Rating The Issue (November 2021)
https://docs.vis.com.pk/docs/Notchingtheissue202007nov.pdf