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Saudi Pak IAIC's rating upgraded to AA+

RECORDER REPORT

KARACHI: DCR-VIS Credit Rating Agency has upgraded Saudi Pak Industrial and Agricultural Investment Co. (Pvt) Ltd.'s medium-to long-term entity rating to double A plus (AA+) from double A (AA).

According to information released by the DCR-VIS Credit rating agency, the highest short term entity rating, D-1+ (D one plus) has been maintained. These ratings were arrived after a review of accounts for the year ended December 31, 1999. Saudi Pak's ratings have been under surveillance with DCR-VIS since 1997.

The rating upgrade is based on company's strengthened financial position with marked improvement in asset quality, steadily rising efficiency level due to prudent expense management and improved risk culture. Saudi Pak's strong capital base and reserves provide a solid foundation to safeguard against any financial distress. Despite slowdown in economic conditions, Saudi Pak depicted marked increase in its financing operations and profitability during year 1999.

DCR-VIS believes that the ratings are representative of Saudi Pak's conservative debt leverage and formidable liquidity position. Furthermore, increased participation in money market operations has led to enhanced liquidity and profitability. Saudi Pak management's recent decision to market its long-term equity portfolio would add further strength to its balance sheet at the close of year 2000.

Saudi Pak's recent initiatives such as setting up a separate advisory division would contribute to diversify earnings base and enhance fee-based revenues. DCR-VIS believes that Saudi Pak's diversified funding base and solid balance sheet fundamentals would help it in pursuing sizable growth in the future.

The credit agency said that Double A plus means, high credit quality. The protection factors are strong. The risk is modest but may vary slightly from time to time because of economic conditions.

The D one plus means, highest certainty of timely payment. The short term liquidity, including internal operating factors and/or access to alternative sources of funds, is outstanding and safety is just below the risk-free Government of Pakistan short-term obligations.