The Pakistan Credit Rating Agency (Pacra) has maintained the long-term and the short-term entity ratings of Attock Refinery Limited (ARL) at 'AA' (Double A) and 'A1+' (A One Plus), respectively. These ratings denote a very low expectation of credit risk emanating from a very strong capacity for timely payments of financial commitment.
The ratings reflect ARL's strong risk absorption capacity emanating from a debt-free capital structure, and healthy liquidity, enabling the company to manage circular debt prevailing in the energy chain. Although ARL's core operations remain exposed to vicissitude of the international crude oil and refined products pricing, its sizeable investment book-comprising stretigic investments and bank placements - provide a stable, indeed rising source of income. This cushions ARL's core business in times of depressed refining margins.
The ratings take into account the benefits emanating from being a part of an integrated oil group - Attock Group. The ratings could be impacted by external factors such as unfavourable movements in international oil prices and adverse regulatory changes, leading to prolonged downturn in margins. The company is contemplating major upgradation and expansion of its refining capacity. This would mainly be financed through borrowings. However, this has to be managed carefully as it may impact coverages, in turn, ratings.-PR
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