The Pakistan Credit Rating Agency (Pacra) has assigned the long-term entity rating of 'AA-' (Double A minus) and short-term rating of "Al+" (A One Plus) to Sui Southern Gas Company Limited (SSGCL). The ratings denote a very low expectation of credit risk and a very strong capacity for timely payment of financial commitments.
The ratings reflect SSGC's low financial and business risks. The low risk profile emanates from the Government of Pakistan-guaranteed return of 17 percent on its net average operating assets, which continue to grow in pursuance of the company's aggressive network expansion plan. The ratings also take into account the company's strong cash flows, sound financial coverage's and adequate liquidity. Due to the capital-intensive nature of the industry and government regulations, SSGC is likely to maintain its monopoly position in its area of franchise (Sindh and Balochistan).
The company maintained high level of capital expenditure during fiscal year 2006 and first 9 months fiscal year 2007. The resulting expansion in company's network is expected to have a positive impact on profitability and also enables the company to take advantage of future gas discoveries.-PR
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