The Pakistan Credit Rating Agency Limited
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Muhammad Junaid

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PACRA Maintains Stability Rating of NBP Government Securities Liquid Fund

Rating Type Stability Rating
(29-Mar-22 )
(29-Sep-21 )
Action Maintain Maintain
Long Term AAA(f) AAA(f)
Short Term - -
Outlook Stable Stable
Rating Watch - -

NBP Government Securities Liquid Fund (or the ‘Fund’) is a low risk-profile fund. The assigned rating reflects moderate strength of the fund's credit and interest rate risk profile. The investment policy holds that the Fund invest minimum 70% of its net assets in securities issued by the government. At the end of Dec'21, the Fund had allocated ~81% of net assets in government securities. The remaining net assets are placed in banks rated "AA+" and above. Considerable holding of Government Securities minimizes the credit risk. The WAM of the Fund was reported at 12 days at end-Dec'21 due to investment in short term government securities. Furthermore, the average duration of the Fund was also reported at 12 days, which minimizes exposure to interest rate risk. Therefore, the liquidity risk of the fund appears to be mitigated successfully. The top 10 investors possess a concentration of ~62% in the Fund's net assets, which may subject the Fund to high redemption pressure. However, the highly liquid nature of the Fund's allocations provides a cushion against any potential redemption pressure.
Going forward, the Fund may maintain its asset allocation in short term Government Securities, subject to market outlook. Material changes in the Fund's asset allocation strategy, impacting its credit quality and/or exposure to interest rate risk, would affect the rating.

About the Entity
NBP Fund Management Limited (or the "Company"), established in 2005, is licensed by Securities and Exchange Commission (SECP) to carry out asset management and investment advisory business. National Bank of Pakistan is the largest shareholder of the company with a stake of ~54%. In 2019, Baltoro Growth Fund has acquired the entire 36% stake of Alexandra Fund Management Private Limited in the Company. Baltoro Capital is a Pakistan focused private equity firm. Baltoro Capital has made investments in the pharmaceutical, renewable energy and financial services sectors in Pakistan. It is actively deploying its funds in businesses positioned to achieve extraordinary growth. The CEO of NBP Fund Management Limited, Dr. Amjad Waheed, CFA and family also holds a 10% stake in the company.
The Company’s nine-member Board of Directors includes three independent directors and the CEO. With overall assets under management of PKR 169,025mln at end-Dec'21, the Company is currently managing a diversified fund slate of twenty five open-end mutual funds, two voluntary pension schemes and an Exchange Traded Fund.

The primary function of PACRA is to evaluate the capacity and willingness of an entity to honor its obligations. Our ratings reflect an independent, professional and impartial assessment of the risks associated with a particular instrument or an entity. PACRA's comprehensive offerings include instrument and entity credit ratings, insurer financial strength ratings, fund ratings, asset manager ratings and real estate gradings. PACRA opinion is not a recommendation to purchase, sell or hold a security, in as much as it does not comment on the security's market price or suitability for a particular investor.