The Pakistan Credit Rating Agency Limited
12-Feb-21
Analyst
Afnan Iqbal
afnan.iqbal_old@pacra.com_old
+92-42-35869504
www.pacra.com
Applicable Criteria
Related Research
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PACRA Maintains Stability Rating of NBP Government Securities Plan - I
| Rating Type | Stability Rating | |
|
Current (12-Feb-21 ) |
Previous (28-Aug-20 ) |
|
| Action | Maintain | Maintain |
| Long Term | AA-(f) | AA-(f) |
| Short Term | - | - |
| Outlook | Stable | Stable |
| Rating Watch | - | - |
The rating reflects the strength of the plan's credit and liquidity risk profile. The plan's good credit quality and sound liquidity profile emanates primarily from its mandate to invest at least 90% of its AUMs in Government Securities. At end-DeC'20, ~80% of plan's assets were invested in PIBs, ~5% of exposure was maintained in T-Bills and ~11% of funds were deposited in bank rated 'AA-'. In CY20, average duration of the plan remained high, exposing it to interest rate risk. However, the PIBs are to be held until maturity, eliminating the impact of interest rate volatility on the plan's NAV. Due to the declining policy rates in 1HCY20, the plan generated a return of ~13.2% in CY20 and outperformed the benchmark and peer average. The plan's unit holding pattern is highly concentrated with top 10 investors representing ~96% of the net assets. The plan is set to mature on July 12, 2021.
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 (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.