The Pakistan Credit Rating Agency Limited
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Afnan Iqbal

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PACRA Maintains Stability Rating of NIT Government Bond Fund

Rating Type Stability Rating
Action Maintain Maintain
Long Term AA(f) AA(f)
Short Term - -
Outlook Stable Stable
Rating Watch - -

NIT Government Bond Fund aims to invest primarily in Government Securities. In line with its stated investment policy, the fund shall invest at least 70% of net assets in securities issued by GOP and reverse repo in securities issued by GOP. It will also place funds with banks having investment grade rating & above. The weighted average time to maturity of the fund shall not exceed 7.5 years. The assigned rating reflects adequate strength of the fund's credit and interest rate risk profile. At end Dec'20, ~58% of fund's assets were invested in PIBs (3 Years, 5 Years and 10 Years) out of which ~8% are floating rate, whereas ~41% of exposure was maintained with a bank rated 'AA-'. Duration of the fund at end Dec'20 stood at ~375 days, which may expose it to interest rate risk. However, the PIBs were included in the portfolio on short term basis to take advantage of monetary policy easing and may be converted to floating rate instrument going forward. The unit holding pattern of the fund is highly concentrated with top ten investors representing ~80% of the fund's assets, (out of which ~44% are owned investments) which exposes the fund to low level of redemption pressure.
Going forward, the fund intends to shift its assets in higher rated banks, floating rate and short tenor instruments. 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
National Investment Trust Limited was established in 1962 as an unquoted public limited company and pioneer of domestic mutual fund industry. The Company’s Board of Directors currently comprises ten board members out of which nine are non-executive. Mr. Adnan Afridi, CEO/MD who joined in Feb'19 holds profound experience in the financial services and capital markets. Mr. Manzoor Ahmed is the COO and has a successful track record of managing the operations and investment portfolio of the Company. They are supported by a team of qualified and experienced professionals.

The Company is currently one of the largest asset management company in Pakistan with a portfolio of twelve open-end funds which includes two non-public funds namely NIT-SEF and NIT-EMOF, two voluntary pension schemes and an exchange traded fund. The assets under management of the Company stood at ~PKR 94,578mln (including SEF & EMOF) end-Dec'20.

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.