Karachi Rating Agency Maintains Negative Outlook on Khushhali Microfinance Bank’s Debt Instrument

Karachi, VIS Credit Rating Company Limited (VIS) has reaffirmed its rating for the Basel 3 Compliant Tier-II debt instrument of Khushhali Microfinance Bank Limited (KMBL) at ‘B’ (Single B), indicating ongoing challenges with payment schedules and a pessimistic future performance outlook.

According to VIS Credit Rating Company Limited, the long-term rating reflects issues with non-compliance with the original payment schedule for the Bank’s term finance certificates (TFC-II), initially rated on August 18, 2023. These instruments, valued at Rs 1.4 billion and issued at Rs 100,000 each, were aimed at enhancing the bank’s capital adequacy following their subscription on December 27, 2019. Despite their design to mature on December 27, 2027, and plans for redemption in twelve equal quarterly installments starting the 63rd month from the issue date, the bank faces significant hurdles. These include the invocation of a lock-in clause by the State Bank of Pakistan (SBP), leading to missed coupon payments.

The negative outlook reflects the ongoing breach in the Capital Adequacy Ratio (CAR) and the high risk of conversion of the instruments into common equity should these financial strains continue.

The post Karachi Rating Agency Maintains Negative Outlook on Khushhali Microfinance Bank’s Debt Instrument appeared first on Pakistan Business News.