PACRA assigns Preliminary Rating to PMRC – PP Sukuk

Lahore, October 26, 2020 (PPI-OT):Pakistan Mortgage Refinance Company – PMRC, commenced business in 2018 as Pakistan’s first mortgage refinance institution to provide lending to both; Islamic and Conventional Financial Institutions. The purpose of the institution is to increase the availability of affordable mortgages, consequently reducing the shortage of housing in Pakistan. The regulatory structure is supportive to the initiative.

The rating incorporate the robust shareholding of Ministry of Finance, National Bank of Pakistan, United Bank, Habib Bank, Bank Al Falah, Askari Bank, Allied Bank and Bank AL Habib in PMRC. Initial financing has been under World Bank’s Housing Project, on-lent by the Government of Pakistan. The Company’s primary source of finance will emanate from the bond/sukuk issue, hence targeting the development of bond/sukuk market in Pakistan.

Over the years, PMRC’s financing portfolio increased manifolds. Investment book, primarily comprising of government securities, remained healthy. The business risk profile is strong evidenced by healthy asset yield and lower cost of funds. During 1HCY20, Company’s net markup income grew significantly when compared with the same period last year. PMRC’s financial risk profile is also considered favorable where equity base has witnessed organic growth. PMRC is planning series of bonds/sukuk, in upcoming years, which will provide with ample liquidity in years to come for further development of mortgage housing finance industry in the country.

Security structure of the Sukuk reflects exclusive hypothecation charge over specific receivables of the issuer with 25% margin as primary security. In case of any shortfall in receivables, PMRC shall provide charge on Islamic Deposit/Islamic Term Deposit/ GoP Sukuk etc. “Cash Equivalents” till such time receivables to be provided as primary security. The post-tax profit rate is higher; attributable to tax exemption till June, 2023, given to certain class of investors on income and capital gain of bonds issued by PMRC.

For more information, contact:
Analyst
The Pakistan Credit Rating Agency Limited (PACRA)
Awami Complex, FB1, Usman Block New Garden Town,
Lahore – Pakistan
Tel: +9242 586 9504 -6
Fax: +9242 583 0425
Email: hammad.rashid@pacra.com
Web: www.pacra.com

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