Press Release

VIS assigns final rating to the Short Term Sukuk (STS-21) of K-Electric Limited (KE)

Karachi, November 6, 2023: Upon review of executed legal documents, VIS Credit Rating Company Limited (VIS) has finalized the rating of A-1+ (A One Plus) to KE’s Short Term Sukuk (STS-21). Short-term rating of A-1+ reflects highest certainty of timely payment; short-term liquidity, including internal operating factors and/or access to alternative sources of funds, is outstanding and safety is just below risk-free Government of Pakistan’s short-term obligations. Previous rating action was announced on October 20, 2023.
Issue size amounting Rs. 5 billion was issued on October 24, 2023. The tenor of STS-21 is up to 6 months from the date of drawdown and will be redeemed in bullet at maturity; maturity date falling on April 24, 2024. The proceeds of the issue will be utilized for KE’s working capital requirements.
The assigned ratings to the issuer recognize the strategic importance of KE, a vertically integrated utility Company that has distribution rights in Karachi and adjoining areas of Sindh and Baluchistan. KE remains engaged with NEPRA for timely issuance and finalization of its submitted license application as well as approval of Multi Year Tariff. In the backdrop of rising socio-political instability and macroeconomic challenges, including policy rate hike, revenues and profitability indicators of the company were severely impacted in FY23. In addition, the Company had to book sizeable provisioning against doubtful trade debts as all-time high inflation continues to impact the consumers’ capacity to pay. 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 metrics over time. However, with sufficient working capital lines, the Company is strongly positioned to service its short-term sukuk obligations. The Company has been issuing short-term sukuk instruments since February 2022, and to date, they have successfully issued 20 instruments. Out of these, 16 instruments have been redeemed promptly upon maturity and 4 are currently outstanding. The STS rating is contingent on the Company's favorable outcome of operational improvements, license extension and tariff petition as expected; to support liquidity.
For further information on this rating announcement, please contact Mr. Maimoon Rasheed at 042-35723411 or the undersigned (Ext. 207) at 021-35311861-64 or email at

Sara Ahmed

Applicable Rating Criteria: Industrial Corporates (May 2023)

Rating The Issue (August 2023)

VIS Issue/Issuer Rating Scale

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