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The Pakistan Credit Rating Agency Limited
Press Release

Date
09-Mar-21

Analyst
Afnan Iqbal
afnan.iqbal_old@pacra.com_old
+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 Maintains Stability Rating of MCB DCF Income Fund

Rating Type Stability Rating
Current
(09-Mar-21)
Previous
(19-Oct-20)
Action Maintain Maintain
Long Term AA-(f) AA-(f)
Short Term - -
Outlook Stable Stable
Rating Watch - -

The rating reflects the adequate strength of the fund's credit and interest rate risk profile. Investment in short tenor instruments and considerable placements in banks enhances the liquidity profile of the fund. As per the IPS, weighted average time to maturity of the net assets shall not exceed 4 years and this condition shall not apply to securities issued by the GoP and there is no restriction regarding time to maturity of any single asset in the portfolio and duration of a single security in the portfolio. At end-Dec'20, ~28% of fund's assets were invested with banks primarily rated 'AAA', while ~41% of funds were invested in T-Bills, while the remaining exposure was maintained in government backed securities and spread transactions. The unit holding pattern of the fund is moderately concentrated with top ten investors representing ~34% of the fund's assets, which exposes the fund to low level of redemption pressure.
Going forward, in accordance with the investment policy and market circumstances the fund may increase exposure in banks, spread transactions and short-term government papers. Material changes in the fund's asset allocation strategy, impacting its credit quality and/or exposure to interest rate risk, would affect the rating.

About the Entity
MCB-Arif Habib Limited Savings and Investments Limited (MCB-AH or the "Company") is a public listed company, regulated by the SECP. MCB-AH holds licenses for Asset Management, Investment Advisory and Pension Fund Management. MCB-AH was incorporated in 2000 as Arif Habib Investments Limited and subsequently merged with MCB Asset Management Company in 2011, with the objective of achieving synergies in asset management business and access to a wider distribution network. Pursuant to the merger, name of the Company was changed to MCB-Arif Habib Savings and Investments Limited. MCB-AH caters to both conventional and Shariah compliant clientele and is currently managing a diverse product slate of fifteen open end funds and two voluntary pension schemes. MCB-AH is also managing one the largest AUMs under SMA segment and holds significant position in the investment advisory domain.

The major shareholders of MCB-AH are MCB Bank Limited ~51%, Arif Habib Corporation Limited ~30% and Adamjee Insurance Company Limited ~8%. The general public holds remaining ~11% of the shares. MCB-AH's control vests in eight member board of directors, including the CEO. There are four non-executive directors, while three directors are independent. The AUMs (CIS & VPS) of MCB-AH increased to ~PKR 82,721mln at end Dec'20 (Jun'20: ~PKR 66,210mln).

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.