Karachi: VIS Credit Rating Company Limited (VIS) has assigned a preliminary bank loan rating of 'AA' to Ghotki Kandhkot Road and Bridge Company (Pvt.) Limited (GRBC) for a secured bank loan intended for a significant infrastructure project involving the construction of a bridge and approach roads over the River Indus. This rating indicates a high credit quality with strong protection factors, although subject to slight variations due to economic conditions. VIS also reaffirmed GRBC's entity ratings at 'A/A-2' with a stable outlook, a continuation from the previous rating action announced in March 2023.

According to VIS Credit Rating Company Limited, GRBC was established on May 21, 2018, under the then Companies Ordinance, now the Companies Act of 2017, as a special purpose vehicle to manage the design, finance, building, operation, and transfer of the bridge project. It is a subsidiary of Sachal Engineering Works (Private) Limited, which holds a 53.33% share, with the Government of Sindh owning the remaining 46.67% without voting rights. Originally planned as a smaller project, the scope was significantly expanded in November 2022 to include a 12.20 km bridge across the entire span of the River Indus, along with 30.941 km of approach roads and a 4.58 km Thul Link Road.

GRBC aims to fund this expanded project scope through a PKR 19,000 million Syndicated Long Term Local Currency Project Finance Facility, with Habib Bank Limited and Meezan Bank Limited serving as lead advisors. The terms include a spread adjustment to 3M KIBOR + 150 basis points per annum, with a project tenure now set at 11 years. This extensive funding framework reflects the company’s low business risk profile, minimal demand risk, and strong government backing, though it remains sensitive to potential project delays and liquidated damages.

The assigned ratings benefit from a robust security structure including a continuous, unconditional debit authority on the Government of Sindh's Non-Food Account No. 1 and a Provincial Guarantee covering half of the debt. Furthermore, GRBC is assured quarterly annuity payments from the Government of Sindh that cover operational and maintenance costs, taxes, debt obligations, a fixed return on equity, and equity redemption. The implementation of an Environment Management Plan as part of an Environmental, Sustainability, Governance framework also supports the favorable ratings.

Going forward, the ratings will hinge on the financial closure of the project, the timely completion of construction milestones, and the ability to manage costs and schedule effectively without significant overruns.