PACRA Assigns Preliminary Instrument Rating to Pakistan's First Ever Green Bond -Parwaaz Financial Services Limited - PPTFC - PKR 1bln - TBI

Parwaaz Financial Services Ltd. (PFSL or "the Company") is a wholly owned subsidiary of Karandaaz Pakistan Limited (KRN). The Company focuses on providing tailored financing solutions to meet the credit needs of Small and Medium Enterprises (SMEs), as defined by the International Finance Corporation. PFSL benefits from a well-structured governance framework, reinforced by a professional management team and underpinned by a comprehensive risk management policy incorporating rigorous risk identification, assessment, and mitigation mechanisms. As of the latest financial period, the Company has built a robust portfolio, with an asset base of ~PKR 2.8 billion. In a significant move, PFSL is set to introduce its inaugural Green Bond, with proceeds designated exclusively for financing environmentally sustainable projects, including renewable energy, energy efficiency, clean transportation, sustainable waste and water management, and pollution prevention. The Company has developed a Green Bond Framework, ensuring alignment with the Securities and Exchange Commission of Pakistan's (SECP) Green Bond Guidelines and the International Capital Market Association's (ICMA) Green Bond Principles. The Framework has been validated through independent consultation and certification by PET Nature (Pvt.) Ltd. To oversee the management of the Green Bond proceeds, PFSL has constituted a dedicated Green Bond Committee. This committee is tasked with ensuring that all eligible projects align with PFSL's Environmental and Social Governance (ESG) Policy and the Company's broader sustainability objectives. The committee will also be responsible for project selection and monitoring. As part of its compliance and governance protocol, PFSL has committed to publicly disclose key performance indicators related to the allocation of proceeds and the environmental impact of the funded projects. Additionally, the Company will engage an independent auditor to conduct periodic reviews of fund utilization, ensuring transparency and accountability. The credit rating assigned to the Green Bond considers the Company's strong governance structure, well-defined risk management practices, and the security measures established for this bond's issuance.
The rating depends on PFSL's continued ability to achieve its strategic objectives while maintaining sound asset quality and adhering to regulatory and internal risk management frameworks. Compliance with SECP guidelines and external audit reviews remains crucial.

About the Entity
Parwaaz Financial Services Ltd. (PFSL) was incorporated in 2020 under the Companies Act, 2017. The Company operates as a Non-Banking Finance Company (NBFC), licensed to provide investment finance services.

About the Instrument
PFSL plans to issue its first Privately Placed Term Finance Certificate (TFC) amounting to PKR 1 billion, structured as a Green Bond with a 3-year tenor. The bond will be secured through a registered hypothecation charge on PFSL's current and future book debts and receivables, with a 25% margin. PFSL will maintain a Debt Service Reserve equal to one quarter's peak profit instalment amount throughout the bond's tenor. This reserve will be arranged by KRN.