The Pakistan Credit Rating Agency Limited
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Afnan Iqbal

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PACRA Maintains Stability Rating of NBP Government Securities Plan - I

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

The rating reflects the strength of the plan's credit and interest rate risk profile. The plan's good credit quality and sound liquidity profile emanates primarily from its mandate to invest a minimum of 90% of its AUMs in government securities. At end Dec-19, 85% of plan's assets were invested in PIBs, whereas 5% of exposure was maintained in T-Bills. Average duration of the plan remained high during Apr-19 to Dec-19 (489 days), exposing it to interest rate risk. However, the PIBs will be held to maturity, eliminating the impact of interest rate volatility on the plan's NAV. The plan's unit holding pattern is highly concentrated with top 10 investors representing 94% of the net assets.
Going forward, the plan intends to maintain its asset allocation in government securities, while keeping the remaining fund's as bank placement's. Material changes in the plan's asset allocation strategy, impacting its credit quality and/or exposure to interest rate risk, would affect the rating.

About the Entity
NBP Fund Management Limited, established in 2005, is licensed by Securities and Exchange Commission (SECP) to carry out asset management and investment advisory business. National Bank of Pakistan is the largest shareholder of the company with a stake of ~54%. During the year, Baltoro Growth Fund acquired the entire 36% stake of Alexandra Fund Management Private Limited in the company. Baltoro Capital is a Pakistan focused private equity firm. Baltoro has made three investments in the pharmaceutical, renewable energy and financial services sectors. It is actively deploying its funds in businesses positioned to achieve extraordinary growth. The CEO of NBP Fund Management Limited, Dr. Amjad Waheed, CFA and family also holds a 10% stake in the company. The Company’s nine-member Board of Directors includes three independent directors and the CEO. During FY19 and 1QFY20 there have been four new inductions on the Board of Directors. The Company is currently managing a diversified fund slate of twenty-seven funds under twelve different categories and two voluntary pension schemes.

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.