The Pakistan Credit Rating Agency Limited
Press Release


Mohsin Naseer

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PACRA Maintains Stability Rating of MCB DCF Income Fund

Rating Type Stability Rating
Action Maintain Maintain
Long Term A+(f) A+(f)
Short Term - -
Outlook Stable Stable
Rating Watch - -

The investment objective of the fund is to deliver superior fixed income returns by investing in an optimal mix of authorized debt instruments while taking into account capital security and liquidity considerations.

The rating reflects the fund's strong credit quality and sound liquidity profile emanating from sizeable investments as daily cash balances. The portfolio of the fund at end-May17 primarily comprised bank balances (47%) with banks rated 'AA-' & above, while 4% exposure was with Government securities [T-Bills]. The remaining assets of the fund were invested with financial sector TFCs [(i.e. 25%) with 'AA-' & above], spread transactions (1.4%) and margin trading system (5.3%) which due to its self-liquidating nature, possesses less risk over a short tenure. The unit holding pattern of the fund remains well diversified with top 10 investors representing 30% of the fund's assets.

Going forward, the fund intends to largely hold the same portfolio construction. Material changes in the fund's asset allocation strategy, which could negatively impact the fund's credit quality and exposure to interest rate risk, remain critical for the rating.

About the Entity
MCBAH is a subsidiary of MCB Bank Limited (MCB). MCB holds majority stake (51%) in the company, followed by Arif Habib Corporation Limited (30%). The company is managing fifteen open end mutual funds along with two pension schemes with AUMs of ~ PKR 47bln at end-Mar17. MCBAH also manages an SMA portfolio of ~ PKR 24bln. Sizeable chunk of this portfolio is related to an associated company. MCB, the fourth largest bank in Pakistan in terms of asset size and branch network, has a very strong financial position, evidenced by a long-term entity rating of AAA by PACRA. Arif Habib Corporation is the holding company for Arif Habib Group with interests in the financial and industrial sectors.

MCBAH’s eight members BoD, three representatives from MCB including CEO, two representatives from AHG and two are independent. Mian Muhammad Mansha - Chairman MCB - serves as the Chairman on the board. Mr. Nasim Beg - a representative of AHG - acts as the Vice Chairman. Mr. Saqib Saleem, former Chief Operating Officer and Company Secretary, is leading the AMC as Chief Executive Officer. Mr. Mirza Sajjid Baig has been appointed as SVP-Head of Sales & Marketing.

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.