The Pakistan Credit Rating Agency (PACRA) has assigned a rating of ‘A' (Single A) to the proposed unsecured, subordinated term finance certificates issue of PKR 800mln by Prime Commercial Bank Limited. The rating denotes a low expectation of credit risk emanating from a strong capacity for timely payment of financial commitments.

The rating reflects Prime Bank's improving risk profile, significant increase in core earnings together with a maintained strong liquidity. The rating also recognizes the healthy growth trends with increasing outreach and greater focus on the middle market segment.

About the issuer – the bank: PCBL, after commencing operations in 1992, currently operates with a network of 48 branches. The controlling stake in the bank is held by a group of foreign investors, mainly members of a Saudi family, belonging to a highly regarded, very sizeable and well diversified business group of Saudi Arabia. During 2003, the individual holdings of this family were consolidated under a company named ‘Arab Asian International Holding Company' which is registered in Bahrain and is owned by the same family. Short-term working capital and trade related financing activities form the core business area of the bank. Its future strategy envisages continued but gradual growth through the expansion of its branch network, with major focus on the small and medium enterprises.

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 1.90%, payable semi-annually. Principal redemption will be in four equal annual installments commencing from the 60th month of the issue.