Press Release

VIS Revises Ratings of Hascol Petroleum Limited (HPL)

Karachi, September 04, 2019: VIS Credit Rating Company Ltd. (VIS) has revised the entity ratings of Hascol Petroleum Limited (HPL) to ‘BBB/A-3’ (Triple BBB/A-Three) from ‘AA-/A-1’ (Double A Minus/A-One). Rating of HPL’s secured Sukuk issue of Rs. 2billion has also been revised to ‘BBB+’ (Triple B Plus) while preliminary rating to the proposed commercial paper of Rs. 3 billion has also been downgraded to A-3 (A-Three). Outlook on the assigned ratings continues to be ‘Negative’. The previous rating action was announced on 24th April 2019.

Revision in ratings incorporate significant deterioration in financial risk profile on the back of sizeable loss incurred by the Company in 1HCY19 resulting in weakening in liquidity profile and risk absorption capacity. Ratings also reflect continued high capital expenditure levels despite plans to reduce the same in the ongoing year. Resultantly, borrowings continued to increase on a timeline basis which along with sizeable equity erosion has translated into weak leverage indicators. Ratings also reflect weakening in industry dynamics and HPL’s import based model leading to increased market risk which has impacted business risk profile. Ratings depend upon and incorporate strategic investment of Vitol Dubai Limited (VDL) in HPL, a significant international player in the oil sector. Recently, VDL has provided financing facilities to the tune of $42million to HPL. Ratings remain dependent upon management plans to strengthen capitalization levels through rights issue and will incorporate the same in ratings upon materialization.

For further information on this rating announcement, please contact the undersigned (Ext: 201) at (021)35311861-70 or Mr. Talha Iqbal (Ext: 213) fax to (021)35311872-3.




Javed Callea
Advisor


Applicable Rating Criteria:
Oil & Gas Industry (November 2016) http://www.vis.com.pk/docs/Meth-OilGas201611.pdf
Industrial Corporates (May 2016) http://www.vis.com.pk/docs/Corporate-Methodology-201605.pdf

Information herein was obtained from sources believed to be accurate and reliable; however, VIS Credit Rating Company Limited (VIS) does not guarantee the accuracy, adequacy or completeness of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information. VIS, the analysts involved in the rating process and members of its rating committee do not have any conflict of interest relating to the rating(s)/ranking(s) mentioned in this report. VIS is paid a fee for most rating assignments. This rating/ranking is an opinion and is not a recommendation to buy or sell any securities. Copyright September 04, 2019 VIS Credit Rating Company Limited. All rights reserved. Contents may be used by news media with credit to VIS.