The Pakistan Credit Rating Agency (PACRA) has assigned long-term entity rating of 'AA' (Double A) to ICP and maintained its short-term rating at 'A1+' (A One Plus). These ratings, applicable to senior unsecured creditors, denote a very low expectation of credit risk and a very strong capacity for timely payment of financial commitments. ICP's ratings reflect the Corporation's practically risk-free profile, emanating from a completely depleted financing portfolio.
The rating also factors in its substantially diminished credit risk through adequate provisioning and continuing recoveries. The liquidity provided by substantial capital gains, augmenting the capacity of the Corporation to honour its short-term liabilities in a timely manner, is also a key factor.
The Corporation is currently performing limited operations while awaiting a decision from the Privatisation Commission with regard to its privatisation process as an ongoing concern.
The exact time frame for completion of the process has not yet been indicated. Pacra is, therefore, assigning the ratings with the assumption that until the privatisation process is completed ICP will continue to function with its current operations and not venture into any new business activities which could enhance the risk exposure.
About the Corporation: Investment Corporation of Pakistan (ICP)--a state-controlled Development Finance Institution--was established through the ICP Ordinance 1966.
The main objective of ICP was to strengthen the capital market in Pakistan, primarily through encouraging broader participation in listed equity securities. ICP performed its core functions satisfactorily until the late 80s when its financial position began to deteriorate after entering project financing activity.
High incidence of non-performing loans and slump in the stock market led ICP to a liquidity crunch and the Government decided to wind up the Corporation. The Privatisation Commission (PC), however, had recommended for privatisation of ICP in April 2003, and in March 2004 it appointed financial and legal advisers for the ICP privatisation transaction.
The advisers have submitted their report to the PERCENT, and ICP management is of the view that the PC is actively engaged in the privatisation process of the Corporation.
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