VIS assigns 'A-1' rating to JDW Sugar Mills short-term Sukuk

March 04, 2024 (MLN): The VIS Credit Rating Company Limited (VIS) has finalized an assigned entity rating of ‘A-1’ to the short-term Sukuk of JDW Sugar Mills Limited (PSX: JDWS), the latest press release issued by VIS showed.

A short-term rating of A-1 reflects high certainty of timely payment; liquidity factors are excellent and supported by good fundamental protection factors. Risk factors are minor.

To recall, the last rating action was announced on February 07, 2024.

The company is part of the JDW Group, which has a presence in sugar, corporate farming, and power generation.

JDWS is principally engaged in the manufacturing of sugar, the production of electricity, and managing corporate farms.

The assigned ratings incorporate JDWS's market position as the leading player in the country’s sugar industry, significant experience of sponsors in the sugar and agriculture sector and a professional management team.

The company has longstanding relationships with growers along with a focus on research activities in sugarcane development.

JDWS issued an unsecured Short Term Sukuk (STS-2) of Rs5 billion on February 15, 2024. Proceeds of the Sukuk will be utilized to meet the working capital requirements.

The instrument has a tenor of up to 6 months maturing for repayment in bullet on August 15, 2024.

JDWS however, has an option for prepayment of the entire outstanding facility amount or part thereof through the company’s internal cash flows with fifteen (15) days prior written notice.

The assigned rating is contingent on the structure of the Sukuk and improving financial metrics.

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