Press Release

VIS Reaffirms Ratings of Swat Expressway Planning Construction and Operation (Private) Limited

Karachi, June 30, 2020: VIS Credit Rating Company Limited (VIS) has reaffirmed the entity ratings of Swat Expressway Planning Construction and Operation (Private) Limited (SEPCO) at A-/A-2 (Single A Minus/A-Two). The medium to long-term rating of ‘A-’ denotes good credit quality coupled with adequate protection factors. Moreover, risk factors may vary with possible changes in the economy. The short-term rating of ‘A-2’ denotes good certainty of timely payment coupled with sound company fundamentals and liquidity factors. Outlook on the assigned ratings is ‘Stable’. The previous rating action was announced on June 26, 2019.

The ratings assigned to SEPCO take into account strong sponsorship profile of its two shareholders. Shareholding of the company is vested with Frontier Works Organization (FWO) (Class A shares) and Pakhtunkhwa Highways Authority (PKHA) (Class B shares), which have ample experience in infrastructure projects. FWO has undertaken major projects under public private partnership and Build-Operate-Transfer (BOT) mandates. The ratings draw comfort from precise financial planning and execution resulting in avoidance of cost overruns. However, the ratings are constrained by absence of parent company guarantee and sponsor support agreement between SEPCO and the sponsor (FWO). Due to non-availability of Concession Area and revision in original construction plan, entailing construction of additional structures, completion of expressway has not been achieved yet. However, a diversion is provided for the same route with adequate arrangements to facilitate commuters’ journey. Therefore, the construction and implementation risks are largely addressed. Independent engineer has granted Extension of Time (EOT) upto September 30, 2020; however, the project is envisaged to be completed by August, 2020.

Revenues have fallen short of projected growth on account of change in scope of project and current impact of pandemic. Ratings are supported by presence of Operating Servicing Reserve Account (OSRA) equivalent to around 30% of total debt and the company’s entitlement to receive losses in toll revenue from PKHA in case of extraordinary circumstances. The ratings remain dependent on successful achievement of Commercial Operation Date (COD) in stipulated time, with no further delays. Further, traffic volumes following COD and the maintenance of Debt Service Coverage Ratio (DSCR) at certain level as specified in concession agreement, are imperative to the assigned ratings.

For further information on this rating announcement, please contact Ms. Tayyaba Ijaz 042-35723411-13 (Ext. 8004) and/or the undersigned at 021-35311861-66 (Ext. 306) or email at

Faryal Ahmad Faheem
Deputy CEO

Applicable rating criterion: Corporates (May 2019)

Information herein was obtained from sources believed to be accurate and reliable; however, VIS Credit Rating Company Limited (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.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.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 2020 VIS Credit Rating Company Limited . All rights reserved. Contents may be used by news media with credit to VIS .

VIS Credit Rating Company Limited