The Pakistan Credit Rating Agency Limited
Press Release


Muhammad Usman

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PACRA Maintains Stability Rating of NIT Income Fund

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

The fund's investment objective is to generate a competitive stream of returns with the moderate level of risk for its unitholders, by investing primarily in a portfolio of fixed income instruments.

The rating reflects the funds sound liquidity and strong credit profile emanating from the significant allocation in cash balances with AA+ rated banks. The portfolio of the fund at end-Dec-17 is primarily invested in cash: ~86%. The remaining net assets of the fund are allocated in good quality debt instruments (TFCs: ~11%) and ~1% in AAA T-Bills. Exposure in Margin Trading System is ~1%, which due to its self-liquidating nature, possesses less risk over a short tenure. The unit holding pattern of the fund is highly concentrated with top10 investors representing 70% of the fund's assets, (of which ~36% are owned investments) which exposes the fund to moderate level of redemption pressure.

Going forward, the fund intends to increase its exposure in TFCs and T-Bills. The remaining assets of the fund will remain invested in cash with AA+ banks. 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
NIT is the first asset management company of Pakistan, formed in 1962. The Government of Pakistan (GoP) directly and indirectly through government-owned entities is a major shareholder (41.65%) in the company. Other shareholders comprise prominent businessmen and commercial banks having a shareholding of 8.33% each. These shareholders are represented by a board of eleven directors. The company is currently one of the largest asset management company in Pakistan with a portfolio of 8 open-end funds & 2 pension funds. The open end funds have an AUM base of ~PKR 97bln at end-Dec17.

The Managing Director, Mr. Manzoor Ahmed, holds profound experience in the domestic mutual fund industry. He is supported by a team of qualified and experienced professionals.

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.