VIS Assigns Initial Entity Ratings To PSO

VIS Credit Rating Company Limited has assigned initial entity ratings of double A Plus /A-One Plus to Pakistan State Oil Company Limited

KARACHI, (UrduPoint / Pakistan Point News - 19th Jun, 2019 ):VIS Credit Rating Company Limited has assigned initial entity ratings of double A Plus /A-One Plus to Pakistan State Oil Company Limited.

Outlook on the assigned ratings is stable. The long-term rating of "AA+" indicates high credit quality; protection factors are strong, said a press release on Wednesday.

Risk is modest but may vary slightly from time to time because of economic conditions.The short-term rating of "A-1+" signifies highest certainty of timely payment; short-term liquidity, including internal operating factors and /or access to alternative sources of funds, is outstanding and safety is just below risk free Government of Pakistan's short-term obligations, said press release on Wednesday.

The assigned ratings derive strength from PSO's majority and controlling interest vested with Government of Pakistan and the company's strategic and nationally important position in Pakistan's energy sector.

Ratings also derive strength from PSO's position as the largest oil marketing company in terms of market share, supported by the largest storage capacity and marketing network in the country alongside an adequate support structure.

Despite persistence of circular debt, liquidity profile remains sound due to presence of state owned/controlled counterparties. Moreover, comfort may be drawn from company's stable cash flows, sizeable retail cash transactions and propensity of state support in distressed situations. The ratings are dependent on maintaining sound financial profile, retaining market share in the back drop of rising competition and focused management of trade debts and exchange rate risk.