Analyst
Shahzaib Khalid
shahzaib.khalid@pacra.com
+92-42-35869504
www.pacra.com
Applicable Criteria
Related Research
PACRA Maintains Stability Rating of Pakistan Income Fund
Rating Type | Stability Rating | |
Current (27-Jun-19 ) |
Previous (28-Dec-18 ) |
|
Action | Maintain | Maintain |
Long Term | A+(f) | A+(f) |
Short Term | - | - |
Outlook | Stable | Stable |
Rating Watch | - | - |
The rating reflects good credit quality and liquidity profile of the fund emanating from its 53% net assets as cash placements with minimum rating 'A-' (~35%) at end Dec-18, while fund's exposure in T-Bills was 1%. Meanwhile, there was a high exposure towards debt securities, primarily TFCs (~40%) with minimum rating 'AA-'. This highlights the fund's appetite for risk though currently these TFCs are of good credit quality (AA- and above). The unit holding pattern of the fund is adequately diversified with top ten investors representing 44% of the fund's assets at end Dec-18.
Going forward, the fund intends to maintain exposure in government securities, corporate debt securities and cash balances. The rating is
contingent upon the fund's interest rate sensitivity and volatility in prices of TFCs in case of exposure to low rated 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, remain critical for the rating.
About
the Entity
MCB Arif Habib Savings and Investments Limited (MCBAH), incorporated in August 2000 and listed on the Pakistan Stock Exchange, is a major player in the mutual fund industry of Pakistan. In June 2011, MCB Asset Management Company was merged into Arif Habib Investments. The objective was to achieve synergies in asset management business and access a wider distribution network.
The Company's Board has seven members. Two representatives are from MCB, two representatives from Arif Habib Group, two are independent and the CEO. Mian Muhammad Mansha, Chairman MCB, serves as the Chairman of the Board. Mr. Saqib Saleem is the CEO, having work experience of over thirteen years. With overall assets under management of ~PKR47 bln at end Feb’19, the Company is currently managing fifteen open-end funds and two voluntary pension funds.