The Pakistan Credit Rating Agency (PACRA) has assigned a rating of ‘A' (Single A) to the proposed asset-backed term finance certificates issue of PKR 1,000mln by Chanda Oil and Gas Securitization Company Limited (COGSCL). The rating denotes a low expectation of credit risk emanating from a strong capacity for timely payments of financial commitments. The cash flows from sale of production of Chanda oilfield are considered adequate to allow COGSCL to meet the contractual TFC obligations comfortably.

About the Issuer: COGSCL is a bankruptcy-remote special purpose vehicle. It will acquire the title, property and right in receivables of Zaver Petroleum Corporation Limited (ZPCL) originating from sales of ZPCL's share of production from the Chanda oilfield. The transaction between COGSCL and ZPCL will be a true sale. COGSCL will generate the funds required to purchase the receivables through issuing asset backed term finance certificates and will create a first exclusive charge over the receivables in favour of the trustee.

About the Instrument: The TFC will have a tenor of 7 years including grace period of 6 months carrying profit based on simple average of last 7 days of ask side of 3 months KIBOR rate plus 325 bps with a floor of 8.95% p.a. and a cap of 13% p.a. Principal redemption will be in 27 unequal quarterly instalments commencing from the end of grace period.

About the Originator: ZPCL, incorporated in August 1991, is a local exploration and production company. Hashoo Group owns the majority stake in ZPCL through its different companies and individual nominees. The group has diversified business interests, out of which Pearl-Continental Hotel and Marriott Hotel chains are the most significant. ZPCL has 10.5% working interest in Chanda oilfield, shared with OGDCL (72%) and Government Holdings (Pvt.) Limited (17.5%). The company plans to utilize the funds raised through securitized TFC for its core operations and for debt re-profiling.