The Pakistan Credit Rating Agency (Pacra) has upgraded the long-term entity rating of Modaraba Al-Mali to 'A-' (Single A Minus) while maintaining the short-term rating at 'A2' (A Two).
These ratings denote a low expectation of credit risk emanating from strong capacity for timely payment of financial commitments.
MAM's ratings reflect the execution of the management's well-conceived business model, which has enabled the Modaraba to fortify its earnings without increasing the potential risk. At the same time, the Modaraba's association with JS Group is considered as a key rating factor.
Established in 1987, MAM is a perpetual multipurpose Modaraba, listed on all bourses of Pakistan. JS Finance Limited, with 11 percent equity stake, manages the Modaraba. During 2004, the management company was acquired by JS Group in collaboration with the DCD Group. JS Group holds 75 percent of controlling shares while 25 percent are held by DCD Group.
JS Finance Limited is planning to float specific purpose modarabas in order to carry property business, which will strengthen the earning base of the management company. In the meanwhile, the management company is in the process of merging Modaraba Al Tijarah--another Modaraba under its management--with MAM. The Modaraba is primarily engaged in the business of operating lease and morabaha financing and operates from a single location in Karachi. It plans to continue with leveraged volume expansion while focusing on operating lease in the telecom sector and Morabah Share Financing (MSF). The future growth will be facilitated through mobilising funds through a combination of certificates of musharika and Shariah-compliant credit lines.
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