Press Release

JCR-VIS upgrades the medium to long-term entity rating of First Paramount Modaraba

Karachi, August 08, 2011: JCR-VIS Credit Rating Company Limited (JCR-VIS) has upgraded the medium to long-term entity rating of First Paramount Modaraba (FPM) to ‘BBB’ (Triple B) from ‘BBB-’ (Triple B Minus). Short-term rating has been maintained at ‘A-3’ (A-Three). Outlook on ratings has been revised to ‘Stable’.

Rating takes into account the modaraba’s ability to tide over the challenging environment with prudent portfolio management, minimizing delinquencies and effective decision making. During FY11, FPM has successfully divested its investment in CNG sector, which is faced with uncertainty due to declining natural gas reserves and increasing competition. Business has been redirected towards enhanced activity in murabaha financing and rent and sale of generators.

Though the modaraba has been consistently posting positive bottom line over the years, sustainability and growth in earnings is now largely dependent on the quality of the financing portfolio which increased considerably in the most recent period. Going forward, the ability to maintain portfolio quality indicators will remain a challenge amidst on-going uncertainty in the business environment. JCR-VIS will continue to monitor trends in this respect.

Being secondary market borrowers, the modaraba has also been faced with growth limitations amidst high interest rates in the economy. The issuance of Certificates of Musharika (CoMs), subsequent to approval of SECP, has allowed the modaraba to diversify its funding base and reduce reliance on bank borrowings. With limited opportunities to expand financing portfolio, the modaraba intends to continue with a conservative stance on generating funds from CoMs.

For further information on this rating announcement, please contact Mr. Jamal Abbas Zaidi (Ext: 408) or Mr. Manzoor H Memon, ChE (Ext: 512) at 021-35311861-70 or fax to 021-35311872-3.

Faheem Ahmad
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 2011 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