The Pakistan Credit Rating Agency Limited
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Wajeeha Asghar

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PACRA Maintains Stability Rating of AL Habib Islamic Income Fund

Rating Type Stability Rating
(02-Mar-23 )
(02-Sep-22 )
Action Maintain Maintain
Long Term AA(f) AA(f)
Short Term - -
Outlook Stable Stable
Rating Watch - -

AL Habib Islamic Income Fund (or the "Fund") reflects the medium risk profile. The assigned rating reflects the Fund's moderate credit risk profile emanating from Fund's Investment policy to invest in avenues with sound liquidity. The Fund had allocated ~44.4% in GoP Ijarah Sukuk, ~39.2% in banks majority in AAA rated bank, ~13.4% in Corporate Sukuks rated A+ and above whereas ~3.1% in others at the end Dec’22. The duration of the Fund stood at 24 days at the end Dec’22, limiting exposure to interest rate risk. While the WAM of the Fund stood at 895 days at the end Dec’22. Considering the surging interest rate environment such high WAM is exposing the Fund to high credit risk. However, the major investment in Govt Securities and triple AAA rated banks is providing comfort to the assigned rating. The unit holding pattern of the Fund was highly concentrated where ~70% were represented by the top 10 investors. As per the assigned rating criteria, the Fund need to remain compliant to the specified criteria by investing at least 25% in AAA/Govt Securities and maximum investment in AA- rated avenues would be 25%. However, the Fund was remained partially compliant with the rating criteria and committed to comply by 100%, going forward.
Going forward, the Fund intend to diversify their investment in AA- and above rated avenues. Any material changes in the investment policy or the devised rating criteria for the assigned rating would have an impact on the rating.

About the Entity
AL Habib Asset Management Limited ("AHAML") incorporated in September 2005 as an unlisted public company, is one of the growing Asset Management and Investment Advisory Company in Pakistan. The company is licensed by the Securities and Exchange Commission of Pakistan(SECP) to carry out these services under the Non-Banking Finance Companies Regulations. The Company is a wholly-owned subsidiary of Bank AL Habib Limited. The Board of Directors comprises six members. The CEO, Mr. Kashif Rafi, has vast experience expanding over 21 years in the field of Investments and Fund Management. The Company’s diverse product slate includes 5 conventional funds, 4 shariah-compliant funds, 1 shariah compliant pension fund and 1 conventional pension fund. As of Dec'22, the total net assets of AHAML stood at PKR 74bln.

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.