Muhammad Zain Ayaz
PACRA Downgrades Stability Rating of Pak Oman Government Securities Fund
|Rating Type||Stability Rating|
The rating reflects Pak Oman Government Securities Fund's (or the "Fund") credit quality and liquidity profile emanating from the fund's policy to generate competitive return through investing primarily in government securities. At end Dec'20, ~25% of the fund's exposure was in Term Finance Certificates (TFCs), ~32% in PIBs and ~40% invested in T-Bills. The unit holding pattern of the fund is highly concentrated with top ten investors representing 100% of the fund's assets, of which ~99% are own investments. During 1HFY21, the Fund under performed its benchmark and industry average, due to market to market valuation impact on government securities. Whereas, the Funds assets declined by ~39% since Jun'20. By investing in longer term securities, the Fund's duration has significantly increased to 212 days (Jun'20: 28 days), this may exposes the Fund to interest rate and market risk.
Going forward, the rating remains dependent on maintaining at least 70% allocation towards government securities with portfolio duration not exceeding 2 years. Material changes in the fund's asset allocation strategy, impacting its credit quality and/or exposure to interest rate risk, would affect the rating.
Pak Oman Asset Management Company Limited was incorporated on July 28, 2006 as a public unlisted company. It is licensed by the Securities and Exchange Commission of Pakistan to carry out asset management and investment advisory services under the Non-Banking Finance Companies Regulations. The Company is a majority owned subsidiary of Pak Oman Investment Company Limited (97%). The remaining shareholders include Oman International Development Company (1.2%), Bank Muscat (0.6%) and National Logistic Cell (1.2%). The Company’s Board of Directors comprises six members including the managing director of Pak Oman Investment Company, Mr. Bahauddin Khan. The board’s chairman H.E. Yahya Bin Said Bin Abdullah Al-Jabri is the Minister of the Special Economic Zone Authority at A’Duqum, Sultanate of Oman. The Company’s diverse product slate includes eight open-end funds, six conventional and two shariah compliant funds, with AUM’s of ~PKR 6.6bln as at Dec'20.