PACRA Maintains Stability Rating of NBP Islamic Income Fund
|Rating Type||Stability Rating|
The assigned rating reflects the fund's moderate credit risk and interest rate risk profile emanating from its investment strategy to invest in adequate credit quality and longer duration investment avenues having sound liquidity. At end-Dec'20, majority of the fund's assets were concentrated as cash placements and corporate Sukuk while remaining assets were invested in commercial papers. The fund had placed ~48% of assets as daily product with banks rated ‘A+’ (26%) and ‘A-’ (22%) and ~35% of funds were invested as term deposits with banks rated ‘AAA’ (17%) and ‘A+’ (18%). Remaining assets of fund were invested with Sukuks and Commercial Paper rated AA and AA+. The fund's investment policy (IP) allows the fund to take 100% exposure in 'A-' rated investment avenues of up to 90 days maturity. The fund shall place minimum 25% of assets in Riba free accounts of Islamic banks. This is expected to allow the fund to maintain a strong liquidity profile. As per the IP guidelines, the weighted average time to maturity of the fund shall not exceed 4 Years. Benchmark return of fund will be the 6-month average deposit rate of 3 'A' rated Islamic banks/Islamic windows of conventional banks.
Going forward, the fund intends to divest its holding from 'A-' rated investment avenues to higher rated avenues from the credit rating perspective. Material changes in the fund's asset allocation strategy, impacting its credit quality and/or exposure to interest rate risk, would affect the rating.
NBP Fund Management Limited (or the "Company"), 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%. In 2019, Baltoro Growth Fund has acquired the entire 36% stake of Alexandra Fund Management Private Limited in the Company. Baltoro Capital is a Pakistan focused private equity firm. Baltoro Capital has made investments in the pharmaceutical, renewable energy and financial services sectors in Pakistan. 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. With overall assets under management of PKR 163,473mln at end-Dec'20, the Company is currently managing a diversified fund slate of twenty eight open-end mutual funds, two voluntary pension schemes and an Exchange Traded Fund.