JCR-VIS Credit Rating Company Limited (JCR-VIS) has upgraded the medium to long-term rating of Pak-Gulf Leasing Company Limited (PGL) to 'BBB+' (Triple B Plus) from 'BBB' (Triple B). Short-term rating has been maintained at 'A3' (A-Three). Outlook on ratings is now 'Stable'.
The rating committee noted compliance with minimum capital requirement by the company and the sponsor's willingness to bridge the shortfall (if any) to meet the increased equity requirement for leasing companies, going forward. Please note that ratings continue to be under surveillance during the period of the contract. Any material developments that have an impact on the risk profile of the company may please be notified to us promptly.
The rating takes into account selective underwriting procedures adopted by the company that has kept infection under control, despite a challenging business environment. This however has resulted in slight decline in lease portfolio during FY10, while on the other hand quantum of non-performing leases has reduced on account of recoveries. We have also noted the recent upturn in core business activities, with increased disbursements. JCR-VIS believes that the current economic environment warrants stringent selection criteria, cautious growth and a conservative capital structure. The improvement in profitability indicators on account of increased income from core operations and decline in borrowing levels is a trend that needs to be maintained to sustain ratings going forward.-PR
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