JCR-VIS Credit Rating Company Ltd (JCR-VIS) has assigned a 'preliminary' medium to long term rating of A (Single A) to the proposed Sukuk of Rs three billion (Rs two billion with additional green shoe option of Rs one billion) of Eden Housing Limited (EHL). The outlook on the rating is 'Stable'.
The preliminary Sukuk rating will be converted into final rating on review of the signed legal documents encompassing the structure of the transaction. The assigned rating factors in the brand name established by the Eden Group that results in strong market acceptance and swift off take of housing units.
In addition to this, EHL has a dedicated and professional management team as well as sufficient and up-to-date information technology resources, which complement its project planning and execution capabilities. While timely launch of projects is essential to ensure meeting future targets, the deteriorating economic conditions may hamper achievement of expected results.
Rising costs of construction as well as increasing interest rates may result in pressure on cash flows. Trends in this regard will be monitored closely by JCR VIS. On a positive note, the response to schemes launched by the company earlier in the current financial year has been promising, highlighting the strong demand for low cost housing.
Also supporting ratings is the equity injection of Rs 500m planned for the current financial year and an almost similar amount planned for subsequent periods. Equity injected during FY2008 amounted Rs 1.18b, which was larger than the initial projected infusions.-PR
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