JCR-VIS Assigns Rating to proposed Commercial Paper of Hascol Petroleum Limited

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JCR-VIS Assigns Rating to proposed Commercial Paper of Hascol Petroleum Limited

December 5, 2017

Karachi, December 05, 2017 (PPI-OT):JCR-VIS Credit Rating Company Ltd. (JCR-VIS) has assigned preliminary rating of A-1 (Single A One) to HPL’s first issue of privately placed commercial paper (CP) of up to Rs. 1billion having a tenor of up to 6 months. The CP would be shariah compliant. Rating assigned to the CP would be finalized upon review of signed legal documents.

HPL plans to raise up to Rs. 1billion through two CP issues each of tenor up to 6 months to fund working capital requirement/procurement of oil inventory. Disbursement of 2nd CP issue shall be subject to minimum 2 days clean-up period after the adjustment of the 1st CP issue. The issue entails bullet payment at maturity and has a profit rate of 6 month KIBOR plus 125bps.

HPL has an outstanding entity ratings of ‘AA-/A-1’ (Double A Minus/A-One) by JCR-VIS. The assigned ratings incorporate strengthening in capitalization indicators of HPL with completion of right issuance process. Ratings also reflect increasing market share, significant ongoing and projected investment in infrastructure (storage, retail footprint and supply chain) which will facilitate in sustaining growth momentum and improving corporate governance framework.

Ratings also draw comfort from strategic investment of Vitol Dubai Limited in HPL, a significant international player in the oil sector. Cash flow from operations is projected to remain healthy for timely repayment of the CP with debt servicing coverage remaining over 1(x) even after accounting for CP repayments. Key risk to cash flows vis-à-vis projections may emanate from earning loss from lower furnace oil off-take on account of changes in energy mix.

For more information, contact:
CFA
JCR-VIS Credit Rating Company Limited
VIS House, 128/C,
25th Lane off Khayaban-e-Ittehad,
Phase VII, DHA, Karachi
Tel: +92-21-35311861-72
Fax: +92-21-35311873
Email: sobia@jcrvis.com.pk

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