Lahore, August 20, 2018 (PPI-OT): The ratings reflect the company’s unique business model as a capital investment company, strong sponsor support, in-house investment and research expertise, robust returns in challenging environment and improving technological infrastructure along with a diversified and liquid investment portfolio. The company funds its investment book using a mix of equity, internally generated cash flows and bank borrowings.
The ratings take comfort from the commitment of sponsors/management to maintain a minimum buffer of 5% above the margin requirements of accumulated bank borrowings. As a policy, company has decided that its short term borrowing will not exceed its total long term capital. Additionally, stress testing of portfolio and exposure monitoring on daily basis reduces the risk margin calls on short positioned stocks.
The ratings are dependent on sponsor’s continued commitment and adherence to buffer margin and liquidity parameters. Meanwhile, prudent investment management and ability to capitalize on growth opportunities to maintain performance remain critical. Excessive borrowing, especially in the short term, leading to higher leverage and deterioration in coverages can impact ratings adversely. In addition, deterioration in equity base and/or erosion of buffer margin for elongated period will lead to downward pressure on ratings.
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