The Pakistan Credit Rating Agency Limited
18-Apr-24
Analyst
Hassaan Ahmad
Hassaan.Ahmad@pacra.com
+92-42-35869504
www.pacra.com
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Related Research
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PACRA Maintains Stability Rating of Atlas Sovereign Fund
| Rating Type | Stability Rating | |
|
Current (18-Apr-24 ) |
Previous (18-Oct-23 ) |
|
| Action | Maintain | Maintain |
| Long Term | AA-(f) | AA-(f) |
| Short Term | - | - |
| Outlook | Stable | Stable |
| Rating Watch | - | - |
Atlas Sovereign Fund ("ASF" or the "Fund") is a medium profile fund. The investment objective of the Fund is to provide unit-holders competitive returns with medium risk and high liquidity by investing in Government Securities and Debt Instruments. The assigned rating reflects the Fund's low credit and interest rate risk profile emanating from its investment strategy. The Fund had allocated ~94.05% in Government Securities (PIBs, Floater PIBs & T-Bills), ~4.98% in banks in AA category, ~0.5% in Corporate Sukuks in A category while remaining was invested in others at the end Dec'23. The Duration of the Fund stood at 280 days at the end of Dec'23, exposing the Fund to interest rate risk. The WAM of Fund stood at 358 days at the end of Dec-23, exposing the Fund to credit risk. However, since the investment in long term Govt papers, the credit risk is manageable. At the end of Dec'23 the unit holding pattern of the Fund were ~96.97% representing top ten investor concentration out of which ~80.02% is related party holdings, hence limiting the redemption pressure of the fund.
Going forward, the material changes in the Fund's asset allocation strategy, which could impact the Fund's credit quality and exposure to interest rate risk, would remain critical for the rating.
About
the Entity
AAML, incorporated in August 2002, is a wholly owned subsidiary of Shirazi Investments (Pvt.) Limited – the holding company of Atlas Group. Atlas Group, founded in 1962 with the establishment of Shirazi Investments, is a diversified group with having presence in manufacturing, power, financial services, and trading. The Company’s seven-member Board of Directors comprises five representatives of Atlas Group including the CEO, the other two are independent directors. Mr. Iftikhar H. Shirazi serves as the Chairman of the Board of Directors of AAML along with several other companies of the Group. The board has three committees to provide oversight on the Company’s affairs: 1) Audit Committee, 2) Human Resource & Remuneration Committee, and 3) Investment Committee. The Company had AUMs of PKR 71.120bln at end Dec'23 (Dec'22: ~PKR 49.02bln).