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Untitled Document Final PR
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The Pakistan Credit Rating Agency Limited

Date
09-Jan-2017
Analysts
Saira Rizwan
saira.rizwan@pacra.com

Haider Imran
haider.imran@pacra.com

+92-42-35869504
www.pacra.com
Applicable Criteria

  • Rating Modifiers | Outlook and Rating Watch (Jun 16) [View]
  • Correlation between Long-term and Short-term rating (Jun 16) [View]

Related Research

  • Sector Study | Oil and Gas (Oct 16) [View]
Disclaimer
This press release is being
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dissemination through print/electronic
media. The press release may be used
in full or in part without changing the
meaning or context thereof with
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PACRA Assigns Initial Rating to Proposed Sukuk of Byco; Carrying Unconditional, Irrevocable Guarantee
 Rating Type Debt Instrument
Current
(09-Jan-2017-)
Previous
(22-Jul-2016)
 Action Initial Preliminary
 Long Term AAA AAA
 Short Term - -
 Outlook Stable Stable
 Rating Watch - -

The rating reflects Unconditional and Irrevocable Credit Guarantee available to Sukuk holders from a multilateral guarantor - GuarantCo. Limited, rated AAA (Jan'16) by PACRA. The guarantee would be covering 100% of issue amount (principal). The issuer would maintain a 'Debt Service Reserve Account' (DSRA) under lien of the Security Trustee whereby the installments (Principal plus Profit) shall be made available prior to due date. The issuer will ensure that (a) an amount equivalent to two upcoming Rental payments (profit only) is maintained in the DSRA at all times during the tenor of the Sukuk Issue, and (b) each Redemption amount (principal), is deposited in the DSRA 55 days prior to the relevant Redemption Date.

In case the issuer is unable to fund the installment on the funding date, a 30 days cure period will be given to the issuer. Simultaneously, the guarantor will be informed. If DSRA is not replenished in the stipulated time, the trustee will call the guarantee to settle the total outstanding principal amount. In any case, the guarantor would ensure that requisite amount is filled in DSRA not later than 5 business days before the due date. Meanwhile, profit would be settled through already held Rental Payment.
About the Entity
Byco Oil Pakistan Limited, incorporated in Apr'06, is engaged in oil refining business, having total capacity of 120,000bpd. The company is 100% owned by Byco Industries Incorporated - a joint venture between Byco Busient Incorporated (Byco Group Company) and Abraaj Mauritius Oil & Gas Limited (Abraaj Group Company) with 60% and 40% stake, respectively. Byco Group is in the process of merging its subsidiaries, comprising refinery, OMC, and terminal operations, to generate synergies.

About the Instrument
Byco Oil is in the process of issuing a privately-placed Sukuk of PKR 3,120mln. The Sukuk, having a tenor of 5 years (including 2 years grace period), will have quarterly coupon payments payable @ 3-month KIBOR plus 1.05%. Redemption of Sukuk shall be in twelve equal quarterly instalments starting from 27th month and ending on 60th month. The instrument would be secured by a ranking charge over all the present and future fixed assets of the Issuer with 25% margin.

About the Guarantor:

GuarantCo Limited was incorporated in August 2005. The company has executed thirty six projects with exposure in seventeen countries to date. The ultimate ownership of GuarantCo lies with five governments, four of which (United Kingdom, Sweden, Switzerland and Australia) own through Private Infrastructure Development Group (PIDG), and one (Netherlands) maintains its stake through a Dutch development bank (FMO). GuarantCo is rated 'AAA' by PACRA as well as Bloomfield Investment, 'AA-' by Fitch, and 'A1' by Moody's.
The primary function of PACRA is to evaluate the capacity and willingness of an entity to honor its obligations. Our ratings reflect an independent, professional and impartial assessment of the risks associated with a particular instrument or an entity. PACRA's comprehensive offerings include instrument and entity credit ratings, insurer financial strength ratings, fund ratings, asset manager ratings and real estate gradings. PACRA opinion is not a recommendation to purchase, sell or hold a security, in as much as it does not comment on the security's market price or suitability for a particular investor.
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