Karachi, December 29, 2022 (PPI-OT):VIS Credit Rating Company Limited (VIS) has reaffirmed the entity ratings of Lucky Renewables (Private) Limited (LRPL) at ‘A/A-2’ (Single A/ A-Two). The medium to long term rating of ‘A’ signifies good credit quality, protection factors are adequate. Risk factors may vary with possible changes in the economy. The short-term rating of ‘A-2’ denotes good certainty of timely payment. Liquidity factors and company fundamentals are sound. Access to capital markets is good. Risk factors are small. Outlook on the assigned ratings is ‘Stable’. Previous rating action was announced on November 08, 2021.
The ratings assigned to LRPL incorporate association of the project company with ‘Yunus Brother Group’, a reputable conglomerate with strong financial profile and presence in diversified sectors including cement, power generation, building materials, real estate, textile, chemicals, pharmaceuticals, food and automotive sectors. The assigned ratings take into account low business risk profile of the company underpinned by inking of 25-year long Energy Purchase Agreement (EPA) with the Central Power Purchasing Agency (Guarantee) Limited (CPPA-G). Presence of long-term EPA mitigates off-take risk as obligations of CPPA-G are backed by sovereign guarantee.
The company is susceptible to wind risk; however, extensive wind study reflects very low potential risk to the operations. Further, given the energy generation of the company is from a low-cost renewable source, wind, it is expected to remain on top of the electricity dispatch merit order list. Assessment of financial risk profile incorporates sound projected debt coverage metrics and fair cash flows in relation to outstanding obligations indicating satisfactory projected debt servicing ability; however, inconsistent payment cycle exhibited by power purchaser may translate into some liquidity pressures.
The assigned ratings incorporate elevated leverage indicators in line with project funding mix. Leverage indicators are expected to improve going forward owing to debt repayments and internal capital generation. Ratings remain dependent on maintaining satisfactory operating parameters and achieving projected improvement in leverage indicators over the rating horizon.
For more information, contact:
Director Compliance and Rating Analytics,
VIS Credit Rating Company Limited
VIS House, 128/C, 25th Lane off Khayaban-e-Ittehad,
Phase VII, DHA, Karachi, Pakistan
Tel: +92-21-35311861-72
Fax: +92-21-35311873
Email: bilal@jcrvis.com.pk
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