Press Release

JCR-VIS Assigns Rating to proposed Islamic Commercial Paper of Hascol Petroleum Limited (HPL)

Karachi, January 11, 2019: JCR-VIS Credit Rating Company Ltd. (JCR-VIS) has assigned preliminary rating of A-1 (Single A One) to HPL’s proposed privately placed and unsecured Islamic Commercial Paper (ICP) of up to Rs. 4.0billion (inclusive of Green Shoe Option of Rs. 500m) having a tenor of up to six months. The ICP would be Shariah compliant.

HPL plans to raise up to Rs. 4.0billion through a ICP issue having a tenor of up to 6 months to fund working capital requirement. The issue entails bullet payment at maturity and has a rental rate of 6 month KIBOR plus 150bps.

The assigned ratings to the proposed ICP of HPL take into account Company’s position as the second largest Oil Marketing Company in Pakistan and adequate business & financial risk profile. Given the company’s investment in infrastructure, JCR-VIS expects HPL to sustain its market position over the long-term. Ratings also draw comfort from strategic investment of Vitol Dubai Limited in HPL, a significant international player in the oil sector. However, business risk profile and market share in retail fuels of the company has weakened in view of the overall decline in OMC volumes in 1HFY19. Key risk factors include HPL’s import based operational model and leveraged capital structure which is expected to keep profitability under pressure in the short-term.

Over the long-term, JCR-VIS expects HPL to recover lost market share as macroeconomic indicators stabilize. Management has pursued a number of diversification initiatives which are expected to start contributing to profitability in 2019 but will only become sizeable over the medium term. Liquidity profile of the company is also expected to draw support from reduction in size of projected Capex, favorable working capital cycle and improvement in operational Cashflow in 2019.

For further information on this rating announcement, please contact the undersigned (Ext: 201) or Mr. Jamal Abbas Zaidi (Ext: 2017) at (021)35311861-70 or fax to (021)35311872-3.

Javed Callea

Applicable Rating Criteria:
Oil & Gas Industry (November 2016)
Industrial Corporates (May 2016)

Information herein was obtained from sources believed to be accurate and reliable; however, JCR-VIS Credit Rating Company Limited JCR-VIS does not guarantee the accuracy, adequacy or completeness of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information.JCR-VIS, the analysts involved in the rating process and members of its rating committee do not have any conflict of interest relating to the rating(s)/ranking(s) mentioned in this report.JCR-VIS is not an NRSRO and its credit ratings are not NRSRO credit ratings.JCR-VIS is paid a fee for most rating assignments. This rating/ranking is an opinion and is not a recommendation to buy or sell any securities. Copyright 2019 JCR-VIS Credit Rating Company Limited. All rights reserved. Contents may be used by news media with credit to JCR-VIS.

JCR-VIS Credit Rating Company Limited