Karachi: VIS Credit Rating Company Limited has assigned a preliminary rating of ‘AA- (plm)’ to the Sukuk issue of PGP Consortium Limited, indicating high credit quality with stable outlook, reflecting the company’s strong protection factors and moderate risk influenced by economic conditions.

According to VIS Credit Rating Company Limited, PGP Consortium Limited, a subsidiary of Pakistan GasPort Limited, has established the country’s largest LNG terminal at Port Qasim Karachi. The company benefits from a long-term Operation and Services Agreement with Pakistan LNG Limited, ensuring stable and guaranteed revenue through a ‘take or pay’ arrangement and backed by a revolving Standby Letter of Credit. The planned issuance of a PKR 4,000 million Diminishing Musharakah Sukuk, with a PKR 500 million Green Shoe Option, aims to support capital expenditures and working capital needs. This issuance includes a one-year grace period and proposes a profit rate of 6-month KIBOR plus up to 4.0%, with a minimum floor of 12%, payable semi-annually.

The rating also considers the company’s robust security arrangements including the assignment of SBLC and fixed asset charges. While financial support to an associate has influenced liquidity, the coverage ratios and ongoing contractual agreements support effective debt servicing capabilities. The overall financial health of PGPC is expected to improve following the completion of liquidated damages deductions by Pakistan LNG Limited by September 2024.