PACRA - Entering The Second Decade of Operations

At PACRA, we Evaluate Risk. Our ratings reflect an independent, professional opinion of the credit risk associated with a particular debt instrument or entity. PACRA’s professionals generate in-depth and independent rating reports based on Interaction with clients and their own pool of extensive Knowledge. Being the country’s first rating agency, we carry the onus of Leadership. We are proud of our contribution in introducing the concept of credit rating and increasing public awareness of its uses and benefits. At PACRA, one attribute underlies everything we do: Integrity - the core element of our credibility. And credibility is the sole product that we sell. We remain committed to the mission that we embarked upon in 1994: to be accepted as the leading credit rating agency in the country through highest standards of professionalism and ethics.

KNOWLEDGE is most meaningful when combined with the expertise of those who know where and how to apply it. At PACRA, our team of professionals is both knowledgeable and experienced in all areas within our rating spectrum. Many of our analysts have career backgrounds in the sectors they cover: banking, leasing, insurance etc. Their practical experiences have helped deepen the knowledge base of the entire organization. Being the first credit rating agency in the country gives us an edge in the form of accumulated experience since 1994. More importantly, exposure to a large segment of the corporate and financial sector in the country has enabled PACRA to develop its own computerised database. The database contains updated information on the economy, sectors and regulations of SBP & SECP in addition to company specific information. The database is available online to all analysts and, therefore, facilitates the rating evaluation process. Comprehensive analysis and independent research that is ahead of the curve distinguish PACRA as the rating agency that is proactive, creative and, most importantly, visionary. PACRA has been a member of ACRAA since June 2002. By virtue of this membership, PACRA is committed to promote ‘best practices’ of credit rating, as identified by the Association. PACRA’s website highlights details of these best practices followed by the company.

LEADERSHIP PACRA’s establishment represented an important milestone in the development of the financial infrastructure in Pakistan, and signified the fulfillment of all the necessary and sufficient conditions for the establishment of a local bond (TFC) market in the country. PACRA's business prospects have grown from strength to strength. Our journey of the last nine years has been exciting, rewarding, and most of all, extremely satisfying. This satisfaction flows not only from our expanding business, but also from the reliance our clients place on our professional judgment and integrity. In order to maintain our market leadership and to ensure that we stay ahead, a conscious effort is made to continue with the learning process and to remain on our toes while monitoring ratings. We are proud of our accomplishments and conscious of the trust placed on our rating opinion by all market participants. We continue to strive for ensuring that we remain worthy of the trust.

INTEGRITY is the single most important factor that determines the credibility of a credit rating company. The global experience suggests that the two elements that could potentially undermine integrity are the possibility of conflict of interest and the urge to achieve business growth. Since its inception, PACRA has ensured that the structure of the organization remains insulated from potential conflicts of interest. Thus, of the three institutional shareholders that set up PACRA, two - IFC and Lahore Stock Exchange - were not represented on PACRA’s rating committee, to avoid a conflict of interest situation. In order to guard against a conflict of interest within the operational management, a policy is in place to prohibit PACRA employees from investing in shares of such companies in which PACRA might have access to privileged information during the course of the rating process. There is an additional requirement that employees, at the time of joining and during the currency of their employment with PACRA, are obliged to disclose details of investment in securities. All employees also submit an undertaking that confidential information passed on to PACRA by rated entities shall not be divulged in any form to any third party. What are the safeguards within PACRA against the possibility of compromising rating standards for achieving business growth? PACRA had to make this hard choice at the very inception and has since remained committed to maintaining its standards even at the expense of losing existing or potential rating clients. This is a cost that we have chosen to bear and are likely to bear in future. We do feel, however, that this is a very small cost for preserving market perception about the integrity of our rating opinions. While we do not claim infallibility of our rating opinions, each opinion remains an outcome of professional due diligence and unbiased judgment. We feel gratified that in our nine years of operations, market participants have come to accept the credibility of our ratings and PACRA's rating opinions are held in high regard by all.

INTERACTION The emphasis PACRA places on interaction has enabled us to communicate with our clients effectively and, consequently, to continuously improve upon the quality of our work. Good communication is the key to enriching our professional relationships and our processes, research and services. We encourage feedback. We want our clients to remain in touch with us and we savor the challenge of creating fresh analytical approaches based on the recommendations of those who matter the most to us: our clients. Interaction is emphasized internally, as well. We believe that working together increases the output of the entire organization because everyone can draw on each other’s strengths and help lessen each other’s weaknesses.