Press Release

JCR-VIS reaffirms ratings of Saudi Pak Industrial and Agricultural Investment Company (Pvt.) Ltd. at AA+/A-1+

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Karachi, June 30, 2008: JCR-VIS Credit Rating Co. Ltd. (JCR-VIS) has reaffirmed the medium to long-term entity rating of Saudi Pak Industrial and Agricultural Investment Company (Pvt.) Ltd. (SAPICO) at ‘AA+’ (Double A Plus) with a ‘Stable’ outlook. Short-term rating has also been reaffirmed at ‘A-1+’ (A-One Plus).

SAPICO is a joint venture between the Government of Pakistan and Saudi Arabia, each holding 50% shareholding of the company. The international credit standing of the foreign government is also an important factor in the assigned ratings, as the Kingdom of Saudi Arabia enjoys sovereign ratings of ‘AA-/A-1+’ by a global credit rating agency. Ratings incorporate the implicit support of the two sovereigns.

With the closing of sale transaction of a financial subsidiary, the company booked substantial capital gains during the first quarter of the on-going financial year. Earlier during the year, the company had shed off some of its higher cost borrowings while an effort towards improving the quality of credit exposures is also being made. With the recent interest rate hike, the spreads available to secondary market borrowers may squeeze while inflationary pressures are perceived to have increased the credit risk.

Capitalization indicators have remained strong providing the institution with considerable loss absorption capacity. While the capital gains booked in 1Q08 have mostly been paid out to shareholders as dividends, capital injection to the tune of Rs. 2 billion has been committed by the sponsors. This is in addition to the Rs. 1 billion rights issue during 2007.

JCR-VIS understands that there may be change in senior management and in such an event, its implications on the continued implementation of the Board’s strategy will be keenly monitored.

For further information on this rating announcement, please contact Mr. Safdar Kazi (Ext: 501) or Ms. Sabeen Saleem (Ext: 510) at 5311861-72 (12 lines) or fax to 5311873.

Faheem Ahmed
President & CEO

Information herein was obtained from sources believed to be accurate and reliable; however, JCR-VIS Credit Rating Company Limited (JCR-VIS) does not guarantee the accuracy, adequacy or completeness of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information. JCR-VIS, the analysts involved in the rating process and members of its rating committee do not have any conflict of interest relating to the rating(s)/ranking(s) mentioned in this report. JCR-VIS is not an NRSRO and its credit ratings are not NRSRO credit ratings. JCR-VIS is paid a fee for most rating assignments. This rating/ranking is an opinion and is not a recommendation to buy or sell any securities. Copyright 2008 JCR-VIS Credit Rating Company Limited. All rights reserved. Contents may be used by news media with credit to JCR-VIS.

JCR-VIS Credit Rating Company Limited