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The Pakistan Credit Rating Agency Limited
Press Release

Date
17-Apr-19

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 First Habib Islamic Income Fund

Rating Type Stability Rating
Current
(17-Apr-19)
Previous
(28-Dec-18)
Action Maintain Initial
Long Term A(f) A(f)
Short Term - -
Outlook Stable Stable
Rating Watch - -

The objective of the fund is to provide competitive risk-adjusted returns to its investors by investing in a diversified portfolio of long, medium and short term Shariah Compliant debt instruments while taking into account liquidity considerations.

The rating incorporates the fund's moderate credit quality and sound liquidity profile emanating from the fund's strategy to invest in good quality shariah compliant instruments. At end Dec-18, ~42% of the fund's net assets were invested as cash with banks, whilst ~53% were invested in sukuks rated 'A' and 'AA'. The fund has a well-diversified unit holding pattern, with top 10 investors representing ~93% of the fund size, of which ~44% are group’s own investments, which exposes the fund to a low level of redemption pressure.

Going forward, the fund intends to decrease its exposure in cash whislt increasing the exposure in good quality debt instruments. 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
HAML, incorporated in September 2005 as an unlisted public limited company, is licensed to carry out asset management and investment advisory services under the Non-Banking Finance Companies Regulations. The company is a part of Habib group, the oldest and a distinguished name in Pakistan’s banking circle, with interest in insurance, sugar, textile, auto, food and trade sectors. Habib family and associates, a distinguished name in Pakistan, owns around 70% of shareholding in the company, while Bank AL Habib being the single largest shareholder holds 30% stake in the company.

HAML’s BoD consists of seven members, including the CEO. The CEO, Mr. Imran Azim, is an MBA and has profound experience in the mutual fund industry. The company is currently managing six open-end funds with assets under management of ~PKR 3.8bln at end Dec-18.

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.