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The Pakistan Credit Rating Agency Limited
Press Release

Date
30-Jun-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 NIT Government Bond Fund

Rating Type Stability Rating
Current
(30-Jun-18)
Previous
(12-Dec-17)
Action Maintain Upgrade
Long Term AA(f) AA(f)
Short Term - -
Outlook Stable Stable
Rating Watch - -

The fund's mandate is to generate reasonable return along with the safety of capital for its unitholders with minimal risk by primarily investing in bonds and short-term debt securities issued by Government of Pakistan (GoP).

The rating reflects the change in the investment strategy to reduce the duration of the fund. At end-Dec 17, the portfolio comprised bank placements of 36% with the majority of exposure with 'AA+' and 'AA-' rated banks. The remaining assets of the fund (i.e. 45%) were invested with T-Bills followed by 18% in PIBs, which due to its self-liquidating nature possess less risk over the short tenure. On the monthly average basis, the fund duration stood at 30 days. The unit holding pattern of the fund is highly concentrated with top10 investors representing 77% of the fund's assets, (of which ~40% are owned investments) which exposes the fund to a low level of redemption pressure.

Going forward, the fund intends to maintain exposure in T-bills, some part of the investment in banks having a good credit rating. 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.