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The Pakistan Credit Rating Agency Limited
Press Release

Date
04-Dec-18

Analyst
Muhammad Usman
muhammad.usman@pacra.com
+92-42-35869504
www.pacra.com

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This press release is being transmitted for the sole purpose of dissemination through print/electronic media. The press release may be used in full or in part without changing the meaning or context thereof with due credit to PACRA

PACRA Maintains Stability Rating of NAFA Financial Sector Income Fund

Rating Type Stability Rating
Current
(04-Dec-18 )
Previous
(30-Jun-18 )
Action Maintain Maintain
Long Term A+(f) A+(f)
Short Term - -
Outlook Stable Stable
Rating Watch - -

The fund's objective is to provide income enhancement and preservation of capital by investing in prime quality Financial Sector TFCs/Sukuks, Bank deposits and short-term money market instruments.

The rating reflects the fund's good credit quality, modest liquidity profile and its mandate of maintaining minimum exposure of 70% at all times in the financial sector. At end-Jun 18, the portfolio of the fund was primarily invested as banking deposits and placements ~76%. This exposure is mainly with banks rated 'AAA' 21%. The remaining assets of the fund were invested with debt securities (TFCs:23% - A+ and above). Exposure to interest rate risk is moderate as the duration of the fund is 46 days. The unit holding pattern of the fund is moderately concentrated with top 10 investors representing 50% of the fund's assets.

Going forward, the fund plans to keep its allocation to debt instruments, while the remaining assets will be invested in banks with rating 'A-' and above. Material changes in the fund's asset allocation strategy, which could negatively impact the fund's credit quality and exposure to interest rate risk, remains critical for the rating.

About the Entity
NBP Fund Management Limited (Formerly: NBP Fullerton Asset Management Limited), established in 2005, is licensed by Securities and Exchange Commission (SECP) to carry out asset management and investment advisory business. NBP is the largest shareholder of the AMC with a stake of ~54%, followed by Baltoro Growth Fund ~36% stake which they acquired from Alexandra Fund Management Pte. Ltd. The CEO of NBP Fund Management Limited, Dr. Amjad Waheed, also holds a 10% stake in the company.

The company’s nine-member Board of Directors include three independent directors and the CEO. During the year Mr. Mudassir Husain Khan and Mr. Tariq Jamali joined the company’s board as a Non-Executive director, both are the representatives of the bank. The company is currently managing a diversified fund slate of twenty-five funds.

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.