Pakistan Credit Rating Agency revises Ratings of Atlas Power Limited

Lahore, November 26, 2012 (PPI-OT): The Pakistan Credit Rating Agency Limited (PACRA) has revised the long-term and short-term entity ratings of Atlas Power Limited (APL) to “A+” (Single A Plus) and “A1” (A One) respectively [Previous: AA/A1+]. The ratings denote a low expectation of credit risk.

The ratings of APL incorporate continuing pressure of inter-corporate debt on liquidity profile of the power sector in general, and IPPs in particular. The current regulatory structure, wherein sovereign guarantee is provided for timeliness of cash flows, given adherence to agreed performance benchmarks, ensures low business risk. This remains a critical factor in APL’s ratings. However, at the same time, the company cannot fully isolate itself from sector related risks, that has constrained its financial profile.

On a standalone basis APL’s performance remains strong, mainly characterized by higher efficiency as compared to agreed benchmark with the power purchaser. These ratings recognize the successful management of Operations and Maintenance (O and M) activities which have been outsourced to MAN Diesel, having an established track record.

The company is expected to sustain its performance in the medium term. Lately, certain differences with NTDC on another critical benchmark – availability – have led to lower capacity payments.

However, the company expects a positive outcome. Although weak financial discipline of the sole customer, NTDC, remains the key challenge, comfort is drawn from the company’s association with the Atlas Group

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