Press Release

Ratings of K-Electric Limited- Sukuk 5 and Sukuk 6

Karachi, April 14, 2023: VIS Credit Rating Company Ltd. has reaffirmed the instrument rating of ‘AA+’ (Double A Plus) assigned to K-Electric Limited’s (KE) Rs. 25 billion Sukuk (Sukuk 5) and Rs. 6.7 billion Sukuk (Sukuk 6). Outlook on the assigned ratings is ‘Stable’. The previous rating action on Sukuk 5 and Sukuk 6 were announced on April 29, 2022 and December 29,2022, 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 cash flows that are being routed through MCA is a key rating strength and provides adequate coverage for debt payments being undertaken through the MCA.

VIS has an outstanding entity rating of ‘AA/A-1+’ (Double A/A One Plus) assigned to KE. The assigned rating recognizes 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 Baluchistan. During 1HY’23, revenues and profitability of the Company were negatively impacted on account of rising socio-political instability, devastating floods and macroeconomic challenges. Meanwhile, the Company remains committed to tackle these challenges via actively pursuing to expedite the determination of pending quarterly tariff variations and focusing extensively on further operational improvements which is reflected in improvement in various operational metrices over time. Achieving projected improvement in profitability profile and cash flow coverages while maintaining leverage indicators at manageable level are key rating sensitivities. In addition, continuity in improvement in various operational performance metrics is considered important from a rating perspective.

For further information on this rating announcement, please contact Ms. Tayyaba Ijaz, CFA (042-35723411-13, Ext. 8005) and/or the undersigned at 021-35311861-4 (Ext. 207) or email at

Sara Ahmed

Applicable rating criterion: Corporates (August 2021)

Rating The Issue (November 2021)

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