Karachi, December 2, 2014: K-Electric in its press statement has said that the company’s entity ratings have been upgraded from ‘A+/A-2’ (Single A Plus/A-Two) to ‘AA/A-1’ (Double A /A-One).
According to the rating agency the ratings assigned to KE are underpinned by the strategic importance of the company as a vertically integrated utility. The upgrade takes into account the strong business risk profile of KE as evident from continuous improvement across various operational metrics.
As per the rating agency K-Electric has achieved notable improvement in fleet efficiency in the last few years. Further improvement in this area is expected in view of the on-going conversion of three open cycle power plants to combined cycle power plants. Moreover, major capacity enhancement projects such as development of 660 MWs coal fired project and various other small scale initiatives, are expected to add to the company’s capacity, including the utilization of alternate energy sources, and look promising for the company’s projected generation profile.
The Rating Agency also confirmed that a positive trend in Transmission & Distribution (TD) losses along with management’s projections for continuity of this trend have also been factored into the assigned ratings. Financial risk profile of the company has also improved as reflected by declining leverage indicators and improved cash flow coverage. Given the anticipated improvement in cash flows, debt servicing coverage is expected to remain strong over the foreseeable horizon, under realistic stress test scenarios.