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The Pakistan Credit Rating Agency Limited
Press Release

Date
29-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 NBP Government Securities Liquid Fund

Rating Type Stability Rating
Current
(29-Mar-21)
Previous
(16-Oct-20)
Action Maintain Maintain
Long Term AAA(f) AAA(f)
Short Term - -
Outlook Stable Stable
Rating Watch - -

The fund's objective is to generate optimal return with minimum risk, by investing primarily in short-term Government Securities. As per the investment policy the fund shall place short-term deposits with AA and above rated banks/ DFIs. The fund shall place at least 70% of the assets in government securities. The maximum weighted average time to maturity of the fund will be 90 days. The rating reflects strong credit quality and liquidity profile of the fund. This emanates from maintaining a high exposure to government securities of ~49% of net assets at end Dec'20. Remaining assets were invested with banks primarily rated 'AAA'. 100% of fund's assets were shifted towards T-Bills, subsequent to the FMR reporting date. Fund's average exposure towards interest rate risk was low. The unit holding pattern of the fund represents high redemption risk as top 10 investors represent ~75% of the fund's assets at end Dec'20. Comfort can be drawn from the liquid nature of the investments.
Going forward, the fund may reduce its exposure in government securities and increase in higher rated banks. 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
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.

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.