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The Pakistan Credit Rating Agency Limited
Press Release

Date
18-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 NAFA Islamic Money Market Fund

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

The fund objective is to provide a competitive return with maximum possible capital preservation by investing in low risk and liquid Shariah Compliant authorized instruments.

The rating reflects the fund's very strong credit risk profile emanating from the fund's investment policy to invest in high credit quality investment avenues with sound liquidity. The fund’s portfolio at Dec-18, comprises cash balances ~99%. Fund's portfolio duration of 1 day results in a very low exposure towards interest rate volatility. The fund's unit holding pattern remains concentrated with the top10 investors comprising ~98% of the fund's net assets, of which almost all of the investment is AMC’s own investment which exposes the fund to a very low level of redemption pressure.
Going forward, the rating remains dependent on maintaining assets in AA or above category, whereas at least 50% allocation towards AA+ exposure with portfolio duration not exceeding 60 days.

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 Pte. Ltd. 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, 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, there has been some new induction in the Board of Directors. The company is currently managing a diversified fund slate of twenty-six mutual funds and two pension 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.