Press Release

JCR-VIS Upgrades Ratings of Pak-Gulf Leasing Company Limited to A-/A-2

Karachi, September 25, 2014: JCR-VIS Credit Rating Company Limited has upgraded the medium to long-term entity rating of Pak Gulf Leasing Company Limited (PGL) from ‘BBB+’ (Triple B Plus) to ‘A-’ (Single A Minus). Short term rating has also been upgraded from ‘A-3’ (A-Three) to ‘A-2’ (A-Two). Outlook on the assigned ratings is ‘Stable’.

The upgrade takes into account consistent growth in asset-base of PGL and the management’s strategy of cautious underwriting which has resulted in steady growth in financing portfolio. Simultaneously infection levels have been brought down considerably by posting recoveries against previously classified exposures. During FY14, the Company changed its funding mix which is now tilted towards short-term running finance and, Certificate of Investments subscribed primarily by sponsors. Resultantly, current ratio has declined but remains above 1(x).

PGL’s leverage and gearing indicators are relatively on the lower side. The company’s equity base has shown improvement on account of internal capital generation. The regulator had initially set Minimum Equity Requirement at Rs. 700m which was to be met by end June 2013. However, reforms are under discussion at the regulatory level to revive the NBFCs sector including extension in timeline for meeting the MER up till 30th June, 2018. Notification from the regulator to that effect is still awaited. Shareholders of PGL have consistently expressed commitment for equity injection once a final decision is made by the regulator in this regard.

For further information on this rating announcement, please contact Ms. Sobia Maqbool, CFA at 021-35311861-70 or Mr. Maimoon Rasheed at 042-36610681-83 or fax to 021-35311872-3.



Abdur Rahim, ACII
Advisor

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