Pakistan Credit Rating Agency assigns preliminary rating to the proposed, privately placed and secured short term sukuk issue of Engro Fertilizers Limited

Lahore: The Pakistan Credit Rating Agency (PACRA) has assigned “AA” (Double A) rating to the proposed, privately placed and secured short term Sukuk Issue of PKR 2,000mln by Engro Fertilizers Limited (EFL). The rating denotes a very low expectation of credit risk emanating from a very strong capacity for timely payments of financial commitments.

The rating reflects EFL’s relatively low business risk emanating from a stable urea demand amidst continuing domestic supply deficit, despite capacity expansion. The dynamics of domestic urea market – supply deficit and significant gap from international prices – and EFL’s diverse production plants coupled with sizeable system share has enabled the company to offset production losses – an outcome of gas shortage – through price raise.

This has ensured that the profitability of the company remains intact. The rating recognizes EFL’s ability to manage its financial profile, though stretched as a result of sizeable upcoming maturities. Herein, demonstrated cashflows largely mitigate the associated risk. Meanwhile, EFL continues to derive strength from association with Engro Corporation – a corporate conglomerate.

The instrument rating also incorporates strength of the security structure, reflecting 20% margin over the issue amount on current assets of the company and shorter maturity horizon of the instrument.

For more information, contact:
Hammad Rashid
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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