The Pakistan Credit Rating Agency Limited
12-Jul-17
Analyst
Mohsin Naseer
mohsin.naseer@pacra.com
+92-42-35869504
www.pacra.com
Applicable Criteria
- Asset Manager Rating Methodology | Jun-16
- Methodology | Debt Instruments Rating Methodology | Jun-17
Related Research
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PACRA Maintains Stability Rating of Pakistan Income Enhancement Fund
| Rating Type | Stability Rating | |
|
Current (12-Jul-17 ) |
Previous (09-Dec-16 ) |
|
| Action | Maintain | Maintain |
| Long Term | A+(f) | A+(f) |
| Short Term | - | - |
| Outlook | Stable | Stable |
| Rating Watch | - | - |
The objective of the fund is to deliver return from aggressive income strategy in debt and fixed income market.
The rating reflects sound credit quality and liquidity profile of the fund emanating from the portfolio composition of the fund. At end-May 17, fund's exposure with PIBs was 0.8%, whereas its exposure with cash and TFCs was 40% & 20% respectively. The investment in banks consists of 'AAA' (13%), 'AA' (5.9 %) and 'AA-' (57%) rated banks. The remaining assets of the fund are invested with good quality TFCs rated 'AA-' & above. The unit holding pattern of the fund is moderately diversified with top10 investors accounting for 47% of the fund's units.
Going forward, the management of the fund intends to maintain exposure to government securities, corporate debt securities and cash balances. The rating of the fund remains contingent upon managing the credit quality of the fund and impact of volatility in prices of assets.
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 fourteen 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 three 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.