The Pakistan Credit Rating Agency Limited
14-Apr-23
Analyst
Wajeeha Asghar
wajeeha.asghar@pacra.com
+92-42-35869504
www.pacra.com
Applicable Criteria
Related Research
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PACRA Maintain Stability Rating of NBP Income Opportunity Fund
| Rating Type | Stability Rating | |
|
Current (14-Apr-23 ) |
Previous (19-Oct-22 ) |
|
| Action | Maintain | Maintain |
| Long Term | A+(f) | A+(f) |
| Short Term | - | - |
| Outlook | Stable | Stable |
| Rating Watch | - | - |
NBP Income Opportunity Fund (or the Fund) is a medium-risk profile fund. The assigned rating reflects the Fund's moderate credit and interest rate risk profile emanating from its investment strategy. The Fund had invested ~45.6% in T-Bills, ~22.7% in bank rated A and above, ~19% in TFC/Sukuks rated AA and above whereas, ~8% in PIBs and ~1.3% in others at the end Dec’22. The duration of the Fund stood at 122 days at the end Dec’22, exposing a high level of interest rate risk. Whereas the WAM of the Fund stood at 299 days at the end Dec’22, exposing high credit risk. However, interest rate and credit risk are high due to investment in long term securities such as Sukuks and PIBs. The unit holding pattern of the Fund was ~48.7% at the end Dec'22 representing top ten investor concentration, giving rise to moderate level of redemption pressure.
Going forward, any Material changes in the investment policy or the devised rating criteria for the assigned rating would have an impact on the ratings.
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 213bln at end-Dec'22, the Company is currently managing a diversified fund slate of twenty five open-end mutual funds, two voluntary pension schemes and one Exchange Traded Fund.