The Pakistan Credit Rating Agency Limited
Press Release
a

Rating Action
Lahore: (20-July-2006)
   

PACRA Maintains TFC Rating of
Sui Southern Gas Company Limited (SSGC)

 

 
Analyst
Muhammad Usman Majeed
(+92-42-586 9504)
usman@pacra.com

 

 

 









 

 

 

 

 

 

 

 

 

Disclaimer
This press release is transmitted to you for this sole purpose of dissemination through your newspaper/magazine/agency. The press release may be used by you in full or in part without changing the meaning or context thereof but with due credit to PACRA. However, PACRA has the sole right of distribution of its press releases for consideration or otherwise through any media.

  

The Pakistan Credit Rating Agency (PACRA) has maintained the long-term instrument rating of the PKR 1,250mln Tranche-II of SSGC’s secured TFCs at “AA” (Double A). The ratings indicate a very low expectation of credit risk and a very strong capacity for timely payment of financial commitments.

The TFC ratings reflect SSGC’s inherently low financial and business risks. The low risk profile is a consequence of the GoP-guaranteed EBIT of 17% on its average net operating fixed assets, which continue to grow in pursuance of the ongoing expansion in the transmission and distribution systems. The ratings also take into account the maintained financial coverages and adequate liquidity. Despite the pending uncertainties relating to the modus operandi of the privatization process, developments in the return formula, and the time frame involved, the company’s capacity to repay its obligations during the remaining tenor of the rated TFCs, in PACRA’s opinion, is likely to remain unaffected.

About the TFC Issues: With the full redemption of the first tranche of PKR 1,000mln in June 2006, only the 2nd tranche of PKR 1,250 mln of the secured TFCs remains in issue. The tenor of the issue is five years and the coupon rate is pegged to the SBP discount rate. While profit is payable semi-annually, principal redemption began in the year 2004. The TFCs are secured by an exclusive equitable mortgage of the building housing the company’s corporate offices and a pari passu charge on all present and future machinery & equipments.

About the company: Sui Southern Gas Company Limited (SSGC) was formed in 1989 as a result of a series of mergers. It continues to enjoy a monopoly in transmission and distribution of gas in its franchise area comprising Sind and Balochistan provinces. SSGC is currently catering to the gas requirements of over 2.3 million customers in power, domestic and industrial sectors. The government divested nearly 10% of the company through stock market in FY04. In January 2006, the Privatization Commission has invited EoIs to further divest 51% GOP shareholding in SSGC.
 
The primary function of PACRA is to evaluate the capacity and willingness of an entity to honor its obligations. Our ratings reflect an independent, professional and impartial assessment of the risks associated with a particular instrument or an entity.

PACRA's comprehensive offerings include instrument and entity credit ratings, insurer financial strength ratings, fund ratings, asset manager ratings and real estate gradings.

PACRA's opinion is not a recommendation to purchase, sell or hold a security, in as much as it does not comment on the security's market price or suitability for a particular investor.

 

    
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