Karachi, December 03, 2021 (PPI-OT):VIS Credit Rating Company Limited (VIS) has reaffirmed entity ratings assigned of Grays Leasing Limited (GLL) at ‘BB-/B’ (Double B Minus/Single B). The medium to long-term rating of ‘BB-’ denotes that obligations deemed likely to be met. Protection factors are capable of weakening if changes occur in the economy. Overall quality may move up or down frequently within this category. The short-term rating of ‘B’ denotes speculative investment characteristics; liquidity may not be sufficient to ensure timely payment of obligations. Outlook on the assigned rating is ‘Stable’. Previous ratings were announced on December 30, 2020.
Ratings assigned to GLL take into account its weak financial risk profile; the company continues to face challenges of low business volume, limited funding resources and chronic legacy portfolio of non-performing leases against which recoveries have lately remained nominal. The company continues to withdraw funding support from its associated concern and the Chief Executive Officer (CEO). The sponsor loan was converted to interest-free loan during the period under review; the same resulted in sizable reduction of the financial expense borne by the company. Further, the ratings reflect lack of diversity of leasing operations with leasing activities only diverted towards auto leasing.
The ratings also factor in inadequate capitalization and weak liquidity position of the company due to continued losses. On the other hand, the business risk profile slightly improved owing to low policy rate scenario prevalent making environment for auto-leasing more conducive; the same reflected positively on the value of business transacted during the outgoing year. However, the same was not adequate to serve as a turning point for the company. In addition, the ratings also incorporate qualified opinion of auditors involving non-fulfilment of requirement of recording allowance for lease losses as per expected credit loss model of IFRS-9. The operating environment, therefore, remains uncertain and VIS will continue to closely monitor the company’s performance going forward.
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
Website: https://www.vis.com.pk/