Press Release
VIS Credit Rating Company assigns final rating to Islamic Commercial Paper of Rousch (Pakistan) Power Limited
Karachi, May 15, 2023: Upon review of executed legal documents, VIS Credit Rating Company Limited (VIS) has finalized the rating of A-1 (Single A One) assigned to Islamic Commercial Paper (ICP) issued by Rousch Power (Pakistan) Limited (RPPL). Short-term rating of A-1 reflects high certainty of timely payment; liquidity factors are excellent and supported by good fundamental protection factors. Risk factors are minor. Previous rating action was announced on November 21, 2022.
Issue size amounting Rs. 1.070 billion was issued on December 1, 2022. The tenor of ICP is up to 6 months from the date of drawdown and will be redeemed in bullet at maturity; maturity date falling on May 31, 2023. The proceeds of the issue will be utilized for RPPL’s working capital requirements.
VIS has outstanding entity ratings of ‘AA-/A-1’ (Double A Minus/A One) assigned to RPPL. The ratings incorporate limited demand risk underpinned by guaranteed capacity payments from the Govt. in case electricity is not purchased. Plant availability remained over 90% over the years; meanwhile, in the ongoing year, the Company carried major outage activities for 52 days resulting in lower availability factor. Given the plant’s lower position in the dispatch order and the likely impact of the government’s inability to purchase spot LNG cargoes, the capacity utilization level would remain marginal. In addition, the buildup of receivables is a concern, as the same may translate into higher liquidity risk going forward; however, the rating incorporates very low risk on receivables from GoP.
The liquidity position of the Company is underpinned by adequate cash flows in relation to outstanding obligations amidst limited interest charge on short-term borrowings and no contractual repayments given the entire long-term financing has been retired in 2019. With growth in equity base on the back of internal capital generation, gearing and debt leverage have improved over the years. Meanwhile, 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 Ms. Tayyaba Ijaz, CFA at 042-35723411-13 (Ext. 8005) and/or the undersigned at 021-35311861-4 (Ext. 207) 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 (July 2020)
https://docs.vis.com.pk/docs/Notchingtheissue202007.pdf