VIS Revises Ratings of Hascol Petroleum Limited (04-09-2019)
Karachi, September 04, 2019 (PPI-OT): VIS Credit Rating Company Ltd. (VIS) has revised the entity ratings of Hascol Petroleum Limited (HPL) to ‘BBB/A-3’ (Triple BBB/A-Three) from ‘AA-/A-1’ (Double A Minus/A-One). Rating of HPL’s secured Sukuk issue of Rs. 2billion has also been revised to ‘BBB+’ (Triple B Plus) while preliminary rating to the proposed commercial paper of Rs. 3 billion has also been downgraded to A-3 (A-Three). Outlook on the assigned ratings continues to be ‘Negative’. The previous rating action was announced on 24th April 2019.
Revision in ratings incorporate significant deterioration in financial risk profile on the back of sizeable loss incurred by the Company in 1HCY19 resulting in weakening in liquidity profile and risk absorption capacity. Ratings also reflect continued high capital expenditure levels despite plans to reduce the same in the ongoing year. Resultantly, borrowings continued to increase on a timeline basis which along with sizeable equity erosion has translated into weak leverage indicators.
Ratings also reflect weakening in industry dynamics and HPL’s import based model leading to increased market risk which has impacted business risk profile. Ratings depend upon and incorporate strategic investment of Vitol Dubai Limited (VDL) in HPL, a significant international player in the oil sector. Recently, VDL has provided financing facilities to the tune of $42million to HPL. Ratings remain dependent upon management plans to strengthen capitalization levels through rights issue and will incorporate the same in ratings upon materialization.
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