Press Release
VIS Assigns Preliminary Rating to Proposed Islamic Commercial Paper of Rousch (Pakistan) Power Limited
Karachi, November 21, 2022: VIS Credit Rating Company Limited (VIS) has assigned preliminary rating of ‘A-1’ (Single A One) to Rousch (Pakistan) Power Limited (‘RPPL’ or ‘the Company’) proposed unsecured, Islamic Commercial Paper (ICP) issue of Rs. 2b (inclusive of green shoe option of Rs. 1b). The ICP will have bullet repayment at maturity and will have a tenor of 6 months. The proceeds of the issue will be utilized for RPPL’s working capital requirements. The short-term rating of ‘A-1’ denotes high certainty of timely payments. Liquidity factors are excellent and supported by good fundamental protection factors. Risk factors are minor.
VIS has assigned entity rating of ‘AA/A-1’ (Double A/A-One) to RPPL. RPPL’s business model is devoid of any demand risk. In case electricity is not purchased, RPPL is eligible for guaranteed capacity payment from the Government. The term of Power Purchase Agreement (PPA) will end in February 2031. Despite the settlement of Government of Pakistan (GoP) receivables in Nov’21, the Company continues to face the issue of receivable build up, which stood at Rs. 12.7b as of end-September’2022. The buildup of receivables is a concern, as the same may translate in higher liquidity risk going forward; however, the rating incorporates very low risk on receivables from GoP.
With long-term debt having been retired in 2019, miniscule interest charge on short term borrowing utilization and stable FFO, the Company’s debt servicing ability is considered sound. The quantum of equity declined, as the Company paid off the balance received from GoP as dividends to shareholders. Going forward, as such there are no plans to raise additional long term debt. While interim Gas Supply Agreement (GSA) has been extended with SNGPL for availability of RLNG, finalization of a long-term gas supply arrangement is considered important from a ratings perspective. VIS will continue to monitor the developments in this regard, as and when these materialize.
For further information on this rating announcement, please contact Mr. Arsal Ayub, CFA (Ext: 215) or the undersigned (Ext. 207) at 021-35311861-70 or email at info@vis.com.pk.
Sara Ahmed
Director
Applicable Rating Criteria: Industrial Corporate (August 2021)
https://docs.vis.com.pk/docs/CorporateMethodology202108.pdf
Rating The Issue (November 2021)
https://docs.vis.com.pk/docs/Notchingtheissue202007nov.pdf