Regulatory Alerts2025-09-30
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Debt Instrument Rating Criteria
The Pakistan Credit Rating Agency (PACRA) publishes this methodology to standardize the assessment and notching of long- and short-term debt instruments, encompassing conventional bonds, Sukuk, green bonds, banking facilities, and Basel III compliant securities. The framework uses the issuer’s baseline rating and adjusts it according to relative seniority, collateralization, cash collection mechanisms, and third-party guarantees, while explicitly differentiating asset-based from asset-backed Sukuk structures. It further outlines priority order, non-performance risk, and regulatory conversion or lock-in triggers for Additional Tier 1 and Tier 2 instruments to determine precise rating outcomes relative to the issuing entity.
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