The Pakistan Credit Rating Agency Limited
17-Apr-19
Analyst
Muhammad Usman
muhammad.usman@pacra.com
+92-42-35869504
www.pacra.com
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PACRA Maintains Stability Rating of BMA Chundrigar Road Savings Fund
| Rating Type | Stability Rating | |
|
Current (17-Apr-19 ) |
Previous (29-Nov-18 ) |
|
| Action | Maintain | Maintain |
| Long Term | A+(f) | A+(f) |
| Short Term | - | - |
| Outlook | Stable | Stable |
| Rating Watch | - | - |
The fund seeks to provide its investors with an attractive rate of return by investing in all fixed income and money market instruments of medium risk and short duration. The fund will seek to maintain a rupee weighted average maturity for the investment portfolio of not more than 5 years.
The rating reflects the fund's moderate credit quality and sound liquidity profile. At the end of Dec-18, the fund was invested in TFCs ~4%, while exposure as cash with banks was ~94%. The exposure was with banks rated 'A-' and above with highest exposure in ‘A-’ ~51%. The fund WAM stood at 55 days as at end Dec-18. The unit holding pattern of the fund is concentrated with top 10 investors representing ~95% of the fund's assets. Meanwhile, the group's own investment represents ~50% in total portfolio which exposes the fund to a low level of redemption pressure.
Going forward, the fund intends to maintain its exposure towards cash with banks rated 'A-' and above. Material changes in the fund's asset allocation strategy, which could negatively impact the fund's credit quality and exposure to interest rate risk remains critical for the rating.
About
the Entity
BMA Asset Management Company was incorporated in April 2005 and acquired the license for investment advisory and asset management in April 2005 and July 2005 respectively. The ex-CEO of the company, Mr. Khaldoon bin Latif resigned in Nov-18 and the position of CEO is currently vacant. The company is in the process of hiring a new CEO. The management team comprises seasoned professionals and the majority of the personnel have been with the company for more than a decade. The company has a limited fund slate (currently managing two funds). In terms of AUMs, it stood at ~PKR 1.3bln in Dec-18 (~PKR 224mln in Dec-17).
The company has a five-member board, including the CEO, out of which two members are independent directors. Mr. Salim Khan was appointed as the chairman of the board in October 2017. He possesses vast experience in strategic human resource consultancy and organizational development.