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The Pakistan Credit Rating Agency Limited
Press Release

Date
04-Mar-21

Analyst
Muhammad Zain Ayaz
zain.ayaz@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 Upgrades Stability Rating of First Habib Income Fund

Rating Type Stability Rating
Current
(04-Mar-21)
Previous
(25-Sep-20)
Action Upgrade Maintain
Long Term AA(f) AA-(f)
Short Term - -
Outlook Stable Stable
Rating Watch - -

The rating of First Habib Income Fund (or the "Fund") reflects the funds medium risk profile and also captures the objective of the Fund to provide reasonable rate of return consistent with reasonable concern for safety of principal amount to the Unit Holders. During 6MCY20, the asset allocation of the fund ~75% remained in AAA rated banks/Govt. Securities, which reduced the credit risk exposure of the fund. However, there has been concentration in single bank deposit which would be diversified, going forward. The investment policy of the Fund strictly prohibits the investment in below A rated avenues. The fund has high concentrated unit holding pattern, with top 10 investors representing ~87% of the fund size at end Dec’20. The WAM of the fund increased to ~553 days at Dec'20 (Jun'20: ~438 days) and the duration of the investments is 40 days at Dec'20 which also bodes well for the rating.
Going forward, the management intends to shift funds allocation towards PIBs and T-Bills and in 'AA' and above rated Banks. Shifting more assets to longer term securities may expose the Fund to interest rate sensitivity. The management further apprised on the diversification of assets allocation in banks to reduce the concentration risk. Theses material changes in the fund's asset allocation strategy, have positive impact on the fund's credit quality and would remain important for the rating.

About the Entity
AL Habib Asset Management Limited incorporated in September 2005 as an unlisted public company, is one of the growing Asset Management and Investment Advisory Company in Pakistan. The company is licensed by the Securities and Exchange Commission of Pakistan (SECP) to carry out these services under the Non-Banking Finance Companies Regulations. The Company is a wholly owned subsidiary of Bank AL Habib Limited.
The Board of Directors comprises six members. The CEO, Mr. Kashif Rafi, has vast experience expanding over 20 years in the field of Investments and Fund Management. The Company’s diverse product slate includes 4 conventional funds and 2 shariah compliant 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.