Press Release

VIS Assigns Preliminary Ratings to K-Electric Limited- Sukuk 6

Karachi, April 29, 2022: VIS Credit Rating Company Ltd. has assigned preliminary ratings of ‘AA+’ (Double A Plus) to K-Electric Limited’s (KE) proposed Rs. 12 billion Sukuk (Sukuk 6). Outlook on the assigned ratings is ‘Stable’.

KE plans to issue a privately placed DSLR (Debt Securities Listing Regulations) listed Sukuk by May’22 to the tune of Rs. 12b (inclusive of a green-shoe option of Rs. 4b). The purpose of the Sukuk is to meet permanent working capital needs and shall reduce short-term debt post issuance. Tenor of the instrument is seven years (inclusive of a grace period of two years). The instrument carries profit rate of 3 month KIBOR plus 1.7% and the profit will be payable quarterly in arrears, calculated on a 365 day year basis on the outstanding principal amount. The first such profit payment will fall due three (03) months from the Issue date and subsequently every three (03) months thereafter.

Sukuk Ratings incorporate the Master Collection Account (MCA) mechanism in place. The company will route collections from specific bank collection account(s) into the MCA. The account on a monthly basis will retain 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 and growing cash flows that will be routed through MCA is a key rating strength and provides strong coverage for debt payments being undertaken through the MCA.

The assigned ratings recognize 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 Balochistan. Business risk profile draws support from growing demand for electricity and continuous improvement across various operational metrics. Revenues & profitability indicators have depicted improvement post Covid -19 revival in overall economy. Continuity in improvement in various operational performance metrics is considered important from a ratings perspective.

For further information on this rating announcement, please contact Ms. Asfia Aziz or the undersigned (Ext. 306) at 021-35311861-70 or email at info@vis.com.pk.




Faryal Ahmed Faheem
Deputy CEO

Industrial Corporates - August 2021
https://docs.vis.com.pk/docs/CorporateMethodology202108.pdf


Rating The Issue (November 2021)
https://docs.vis.com.pk/docs/Notchingtheissue202007nov.pdf

Information herein was obtained from sources believed to be accurate and reliable; however, VIS Credit Rating Company Limited (VIS) does not guarantee the accuracy, adequacy or completeness of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information.VIS , the analysts involved in the rating process and members of its rating committee do not have any conflict of interest relating to the rating(s)/ranking(s) mentioned in this report.VIS is paid a fee for most rating assignments. This rating/ranking is an opinion and is not a recommendation to buy or sell any securities. Copyright 2022 VIS Credit Rating Company Limited . All rights reserved. Contents may be used by news media with credit to VIS .