ISLAMABAD: Fitch Ratings has upgraded Pakistan Water and Power Development Authority’s Long-Term Foreign-Currency Issuer Default Rating (IDR) to “CCC” from “CCC-”.
Fitch typically does not assign Outlooks to issuers with a rating of “CCC+” or below due to the high volatility of these ratings.
The upgrade follows the upgrade of the Pakistan sovereign on July 10, 2023 as WAPDA’s ratings are equalised with that of Pakistan sovereign, and sensitive to any rating action on the sovereign.
“WAPDA’s ratings reflect our assessment of government linkage and support incentive, resulting in a weighted score of 50, based on our Government-Related Entities Rating Criteria.
We equalize WAPDA’s ratings with those of Pakistan, regardless of WAPDA’s Standalone Credit Profile“, the Rating agency added.
The senior unsecured bond rating is equalised with the entity’s IDR. The bonds were issued at 7.5 per cent per year for 10 years and are due June 2031.
Factors that could, individually or collectively, lead to positive rating action/upgrade: an upgrade of Fitch’s credit view on the sovereign may trigger positive rating action on WAPDA.
Factors that could, individually or collectively, lead to negative rating action/downgrade: a sovereign rating downgrade, weaker government links or lower socio-political and financial implications of a default may lead to negative rating action.
Copyright Business Recorder, 2023