Pakistan Credit Rating Agency maintains entity and instrument ratings of Pakistan Refinery Limited : AsiaNet-Pakistan

Pakistan Credit Rating Agency maintains entity and instrument ratings of Pakistan Refinery Limited

June 30, 2014 | General Business News | Share:

Lahore, June 30, 2014 (PPI-OT): The Pakistan Credit Rating Agency (PACRA) has maintained the long term and short term entity ratings of Pakistan Refinery Limited (PRL) at ‘A-’ (Single A Minus) and ‘A2′ (A Two) respectively. The rating of the TFC I of PKR2,108mln and TFC II of PKR398mln has been maintained at ‘A’ (Single A). The ratings denote a low expectation of credit risk emanating from a strong capacity for timely payment of financial commitments.

The ratings reflect the strength of the business profile of PRL emanating from sustainable operational history, proximity to exporting/importing hub of the country, strong demand for its products, and strategic importance in the domestic context. The ratings incorporate the company’s ability to manage exposure towards prevailing inter-corporate debt in the energy chain by favourably using commercial credit from domestic E and P companies.

Nevertheless, limited operational flexibility and relatively low margin product slate exposes the company to volatile dynamics of international crude oil and refined products pricing. At the same time, the borrowings which the company has and would procure (to fund technical up-gradation to improve product mix) are likely to constrain its already thin capital structure as well as coverages.

The pressure is exacerbated in periods of stressed profitability; herein it is important for the company to timely implement the expansion project while seeking capital injection, if need arises, from existing/new sponsors.

The ratings could be impacted by prolonged constrain in refining margins and/or adverse changes in the existing regulatory framework leading to depressed core cash flows. The company is pursuing a leveraged up-gradation of its operating platform. Since repayment pattern is aligned to expected cash flows, any completion delay may impact coverages, in turn, ratings.

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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Category: General Business News