Pakistan Credit Rating Agency Limited assigns preliminary rating of A+ to the proposed TFC issue of Engro Fertilizers Limited

Lahore, May 30, 2014 (PPI-OT): The Pakistan Credit Rating Agency (PACRA) has assigned a preliminary rating of “A+” (Single A plus) to the proposed, OTC listed, and secured TFC of PKR 4,000mln to be issued by Engro Fertilizers Limited (EFL). The rating denotes a low expectation of credit risk emanating from a strong capacity for timely payment of financial commitments.

The rating reflects EFL’s relatively low business risk emanating from a stable urea demand amidst continuing domestic supply deficit. Despite short gas supply in the country, the company has been able to achieve high level of capacity utilization lately from dedicated and temporary gas arrangements.

This also enabled efficiency gains from new plant (Enven). Meanwhile, the company is actively pursuing permanent gas supply from dedicated gas fields. Herein, KPD – the major fied – requires ECC’s reaffirmation.

Another major advantage to EFL is expected to be concessionary gas pricing for Enven, of which practical modalities are being finalised. The debt reprofile exercise has re-aligned repayments with ensuing cash flows, coming from committed and assured gas availability; augmenting the financial risk profile of the company.

EFL continues to derive strength from its association with Engro Corporation – a corporate conglomerate. The rating is dependent on execution of the envisaged plan for sustainable gas supply. Moreover, securing concessionary pricing will benefit.

For more information, contact:
Hammad Rashid
Analyst
The Pakistan Credit Rating Agency Limited (PACRA)
Awami Complex, FB1, Usman Block New Garden Town,
Lahore – Pakistan
Tel: +9242 586 9504 -6
Fax: +9242 583 0425
Email: hammad.rashid@pacra.com
Web: www.pacra.com

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