The Pakistan Credit Rating Agency Limited

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PACRA Policies

PACRA's policies tend to describe the criteria for various acts of the rating agency either directly or indirectly related to its rating actions. Through these policies and procedures, PACRA ensures compliance with relevant laws and regulations of the land, besides adherening to best practices of Association of Credit Rating Agencies of Asia and other practices followed by multinational rating agencies. PACRA strives to bring continuous improvement in these policies through internal discussions and feedback of its regulators.

Rating Review Appeal Rating Transition Criteria Default Recognition Criteria

PACRA communicates the rating decision, alongwith detailed credit rating report, to the client, who has the right to appeal. The appeal process is expected to highlight specific issues for reconsideration by the rating committee. The committee’s decision on the appeal is final and duly communicated to the client.....Details

Transition and default statistics are a quantitative tool to gauge the performance of a credit rating agency over a period of time. To measure the performance of its credit ratings by employing this tool, a CRA conducts historical studies to track default rates and rating transitions, which is how much and how often a rating has changed, up or down, over a certain period of time.....Details

Default in plain terms is a failure to fulfill a contractual financial obligation and all CRAs unanimosly agree upon this basic definition. Thus "Default" essentially means an obligor has not paid a financial obligation on its due date which it is required to have paid.....Details

Rating Withdrawals / Suspension Disclosure of Unaccepted Ratings Confidentiality of Information

Instrument rating, in normal circumstances, is withdrawn only when the rated instrument is redeemed. However, in extreme scenario of non availability of requisite information PACRA may withdraw instrument rating. The entity rating is withdrawn either on the client’s decision to withdraw or in extreme cases owing to reluctance by the client to provide the required information. PACRA may suspend rating where circumstances prevent formation of rating opinion. In such cases PACRA makes all efforts to revive the rating at the earliest. The fact that the rating is currently withdrawn/suspended, along with the reason/s, is disseminated publicly.

PACRA does not reveal unaccepted ratings which may not be regulatory driven.

PACRA does not disclose confidential information obtained during the rating exercise to anyone under any circumstances. Beyond ethical considerations, there is a contractual written commitment by PACRA to each of its clients.

Ratings Outlook Compliance Time to Communicate Ratings

PACRA assigns “positive” or “negative” outlook to its ratings to incorporate trends or risks which are evolving and require a longer time frame for materialisation. In case rating is expected to remain stable, PACRA may not mention this in explicit terms.

We have policies and procedures that specify the role of a compliance officer and the officer’s reporting lines and compensation. Policies have also been instituted that encourage employees to report activities illegal, unethical, or in any way contrary to the CRA’s code of conduct to the Compliance Officer.

We publicly release our ratings within 7 days of their being assigned and / or accepted. This is known up-front to the parties involved in the process. However, in the case of voluntary ratings, public dissemination is contingent on express written authorization by the client.


PACRA ratings are kept under continuous surveillance. Formal management meetings are held once a year. The ratings are generally reviewed once every year, unless circumstances warrant an earlier review. Internal reviews are carried out at least once a quarter. PACRA keeps in close touch with the company to remain abreast of interim figures and any internal or external developments that may affect PACRA’s assessment. In addition, PACRA regularly monitors a broad range of economic factors and trends that may impact on credit risk. When an event or deviation from an expected trend has occurred or is expected, an additional information is necessary to take a rating action, the existing rating is placed on ‘Rating Watch’. The rating is then upgraded, downgraded or maintained after assessing the impact of any such change.