February 4, 2019 (MLN): JCR-VIS Credit Rating Company Limited (JCR-VIS) has assigned a ‘D’ (Default) rating to the seven year listed TFC issued by Summit Bank Limited (SBL) due to non-payment of its latest markup payment on account of lock-in-clause being invoked by the State Bank of Pakistan (SBP).
The TFC had previously been assigned a rating of ‘BBB- (SO)’ (Triple B Minus (Structured Obligation)) and had been placed on ‘Rating Watch-Negative’ status in view of weakening in financial profile and delay in potential merger with another Commercial Bank. This rating action was announced on 23rd November 2018.
SBL has in-principle approval of SBP for extension in maturity by one year for principal payment while the Bank also plans to pay accrued mark-up in bullet form along with principal payment after obtaining required approvals.
JCR-VIS has also suspended the entity ratings of ‘BBB-/A-3’ (Triple B Minus/A-Three) assigned to SBL due to non-availability of updated information. No financial statements have been made available after the period ended March’2018. Once required information along with latest financials is made available, JCR-VIS would reassess the ratings.
