11 November 2004	Thursday	27 Ramazan 1425

LAHORE, Nov 10: The Pakistan Credit Rating Agency (Pacra) has maintained long-term rating at "A" (single A) and short-term rating at "A1" (A One) of the House Building Finance Corporation (HBFC).

A Pacra announcement said on Wednesday the ratings denoted a low expectation of credit risk emanating from a strong capacity for timely payment of financial commitments and were applicable to the senior unsecured creditors of the corporation.

The ratings have been placed on the Pacra's Rating Watch pending a management review on assumption of office by the new chief executive and key management personnel.

The HBFC's ratings reflect its sound equity base signifying high risk absorption capacity, strong underlying security against loans and fairly high liquidity levels, which showed a decline from YE02.

The announcement said the ratings also factor in inconsistent performance in the core financing operations and substantial proportion of overdue rentals. Additionally, the ratings recognize improvement in the image and operations of the corporation as a result of restructuring process carried out by the management over the past few years.

At the same time Pacra is concerned about the continuity of the process with the termination of the service contract of the chief executive and uncertainty about the appointment of his successor. As a consequence, while affirming the previous ratings, Pacra has placed these on the Rating Watch.

The corporation was established in 1952 under the HBFC Act, to provide financial facilities for the construction, reconstruction, repair and purchase of houses, particularly to the low and middle-income groups. The government and the State Bank of Pakistan (SBP) jointly hold the share capital of the corporation.

The general direction and administration of the corporation and its affairs is vested in the Board of Directors appointed by the government.

The corporation has a large network of 58 offices spanning across the country, managed through 11 zones with its headquarters at Karachi. The corporation employs more than 1,300 personnel.