The Pakistan Credit Rating Agency Limited
Press Release


Wajeeha Asghar

Applicable Criteria

Related Research

This press release is being transmitted for the sole purpose of dissemination through print/electronic media. The press release may be used in full or in part without changing the meaning or context thereof with due credit to PACRA

PACRA Maintains Instrument Rating of Pakistan Mortgage Refinance Company Limited | PP Sukuk

Rating Type Debt Instrument
(13-Oct-23 )
(14-Apr-23 )
Action Maintain Maintain
Long Term AAA AAA
Short Term - -
Outlook Stable Stable
Rating Watch - -

Pakistan Mortgage Refinance Company (“PMRC” or the “Company”) addresses the long-term funding constraint in the banking sector, which was hindering the growth of primary mortgage market in Pakistan. The assigned rating finds comfort in robust shareholding structure of PMRC, primarily sponsored by Ministry of Finance and National Bank of Pakistan. The assigned rating also takes into account the Company's experienced and professional management team and sound risk management controls. The Company’s one of the major sources of finance emanates from the Bond/Sukuk market in Pakistan. Over the years, PMRC’s financing portfolio increased manifolds and the assets of the Company showed significant increase, supporting the underlying instrument's rating. Further, the rating also incorporates very low exposure to operational & market risks.
During 6MFY23, profit after tax has increased by 64.6% to stand at PKR 1.07bln (SPLY: PKR 0.6bln) majorly on the back of significant increase in net interest income. PMRC has issued a series of bonds/sukuk, providing ample liquidity in years to come for further development of the mortgage housing finance industry in the country. The proceeds of the PP sukuk issued are utilized in refinancing the residential mortgage/housing of the eligible financial institutions.
Strong capitalization indicators and a highly liquid profile would remain key rating drivers of the assigned rating. Furthermore, the funding profile of the Company draws comfort from the availability of long-term funding from the world bank.

About the Entity
PMRC commenced business in 2018 as Pakistan's first mortgage refinance institution to provide financing to both; Islamic and Conventional Financial Institutions. Major controlling interest rests with Pakistan's Ministry of Finance, at ~29% and National Bank of Pakistan at ~14%; the remaining 57% is owned by Habib Bank Limited, United Bank Limited, International Finance Corporation, Bank Al Falah Limited, Askari Bank Limited, Allied Bank Limited, Bank AL Habib Limited, House Building Finance Company Limited and Summit Bank Limited. The board of directors comprises ten members, which includes seven non-executive directors and three independent directors. Seven major financial institutional shareholders are represented on the board encompassing Ministry of Finance, NBP, HBL, UBL, AKBL, BAFL and IFC.

About the Instrument
PMRC has issued Privately Placed Sukuk as instrument of redeemable capital. Issue amount is PKR 3,100mln and profit of 8.25% per annum is payable semiannually on the principal amount. Total profit payments of PKR 640.3mln has been made of which the latest payment of PKR 128.9mln was made on 18th Sep'23. Principal amount will be redeemed in bullet at maturity. Security is based on hypothecation charge over specific receivables of PMRC with 25% margin (primary security) and in case, if the receivables fall short at any time, additional/adequate security will be provided by the Company to cover such short fall.

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.