Moody’s Investors Service published a periodic review of Pakistan’s Water and Power Development Authority (WAPDA) and other ratings associated with the same analytical unit.
The review was conducted through a portfolio review discussion held on 12 May 2021, in which Moody’s Investors Service reassessed the appropriateness of the ratings in the context of the relevant principal methodologies, recent developments, and a comparison of the financial and operating profile to similarly rated peers.
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The statement issued by Moody’s Investors Service showed that the review did not involve a rating committee. Since 1 January 2019, Moody’s Investors Service’s practice has been to issue a press release following each periodic review to announce its completion.
The WAPDA’s B3 corporate family rating is primarily driven by the issuer’s Baseline Credit Assessment (BCA) of b3 and Moody’s Investor Service’s expectation of a very high level of dependence and extraordinary support from the Government of Pakistan (B3) in times of need, said Moody’s.
The BCA of b3 reflects the WAPDA’s dominant position in supplying hydropower and developing water resource infrastructure in the nation, and the recurring financial support from the Pakistani government, which is closely linked to the government’s fiscal budget.
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However, the BCA is challenged by the WAPDA’s weak financial profile because of sizable capital spending on hydropower capacity expansion and delay in collecting electricity tariffs.
As a result, the issuer has limited financial flexibility after servicing interest payments, without considering the support from the government, added Moody’s.
