The Pakistan Credit Rating Agency Limited
Press Release


Muhammad Atif Chaudhry

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PACRA assigns Preliminary rating to Kashf Foundation | PPTFC | PKR 2.5bln | TBI

Rating Type Debt Instrument
(19-Jun-23 )
Action Preliminary
Long Term AAA
Short Term -
Outlook Stable
Rating Watch -

Kashf Foundation is in the process to issue Rated, Secured, Privately Placed, DSLR Listed Term Finance Certificates amounting up to PKR 2.5bln to expand the micro-infrastructure finance. PPTFC is the first gender bond being issued in Pakistan and MENA regions. The rating of the instrument is supported by its strong security structure i.e. (a) the bond is fully principal guaranteed by Infrazamin Pakistan Limited (IZP), in addition to two interest installments. The total maximum guaranteed amount is PKR 2.85bln (b) Exclusive lien on a debt service reserve account ('DSRA'), which will hold an amount equivalent to two Quarterly outstanding interest payments throughout the life of the Instrument, on a rolling basis (c) Exclusive lien on a Debt Payment Account ('DPA'), which will be funded 7 working days prior to the payment date. IZP “the Guarantor” is an innovative, for-profit credit enhancement guarantee company, conceived and designed to issue guarantees for promoting private infrastructure projects. IZP leverages the prior experience of InfraCo Asia and GuarantCo in supporting infrastructure projects in Pakistan, as well as Karandaaz’s local market knowledge and track record of investments focused on supporting financial inclusion. IZP has been assigned the long-term rating of “(AAA)” by PACRA. The instrument has a Pre-default mechanism: if the amount maintained in DSRA becomes exhausted and the Company is unable to meet its debt repayment obligations, a Cure Period of 30 days will be provided during which IZP will make the payments to TFC holders a maximum of up to a guaranteed amount. IZP has the option to make the payments in accordance with the amortization schedule or IZP may accelerate all principal payments to be paid to the TFC holders for early retirement of the outstanding principal. Kashf Foundation, a not-for-profit organization, and a renowned MFI has the source of funding comprising of a) internal generation of profits, b) loans, and c) grants. Kashf has diversified its borrowing to local and foreign institutions. During 9MFY23, Kashf recorded net mark-up income at ~PKR 7bln (9MFY22: ~PKR 5.2bln, FY22: ~PKR 7.3bln) while Profit after tax stood at ~PKR 1,575mln (9MFY22: ~ PKR 1,186mln, FY22: ~ PKR 1,935mln) and equity stood at PKR 8.8bln (9MFY22: PKR 6.4bln, FY22: PKR 7.2bln).

About the Entity
Kashf Foundation ("Kashf") was incorporated with SECP in 2007 as a Public Company Limited by Guarantee. The overall control of the foundation vests in ten members Board of Directors. Dr. Hafiz Ahmed is Chairman of the board. Ms. Roshaneh Zafar is the founder and CEO of Kashf.

About the Instrument
The TFC amounts to PKR 2,500mln inclusive of a green shoe option of PKR 500mln carrying quarterly mark up payment @3MK + 150bps p.a. The three years TFC's quarterly principal repayments shall commence from the fifteenth month, in eight equal installments. The TFC is categorized under "Gender Bond" as it is meeting the criteria for use of proceeds as given under the guidelines eligible to issue gender bond. The utilization of the proceeds would be such that 70% of the proceeds shall be utilized to issue micro-infrastructure-finance loans directed towards the welfare of women via entrepreneurship, business support, flood rehabilitation education, and 30% to meet working capital requirements.

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.