The Pakistan Credit Rating Agency (PACRA) has assigned a rating of ‘AA' (Double A) to the proposed unsecured, subordinated term finance certificates issue of PKR 1,500mln by Askari Commercial Bank Limited (ACBL). The rating denotes a very low expectation of credit risk emanating from a very strong capacity for timely payment of financial commitments.

The rating reflects ACBL's demonstrated ability of sustaining its performance while maintaining a moderate growth trend in the increasingly competitive operating environment. The ratings also take into account the effectiveness of the risk management system, which has helped in maintaining very good asset quality of the bank. The ratings also factor in the benefits accruing to ACBL from its association with Pakistan armed forces.

About the issuer – the bank: ACBL, operating with a countrywide network of 60 branches plus one offshore banking unit (end-Sep 04), commenced its operations in 1992 and has emerged as one of major players in the commercial banking sector of the country. Army Welfare Trust (AWT) remains its principal shareholder controlling the Board of Directors through its nominees. AWT has business interests spread across a wide range of economic and industrial sectors. ACBL offers a full range of commercial banking services to the corporate, middle market and retail segments. The bank has established an image of efficiency and professionalism, attributable in part to its policy of maximum technology utilization.

About the issue: The proposed unsecured subordinated TFCs would have a tenor of 8 years carrying mark-up at a floating rate of latest 6-month KIBOR plus 1.5%. The principal will be repaid in a bullet payment at the maturity of the instrument.