The Pakistan Credit Rating Agency Limited
16-Apr-20
Analyst
Madiha Sohail
madiha.sohail@pacra.com
+92-42-35869504
www.pacra.com
Applicable Criteria
Related Research
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PACRA Upgrades Stability Rating of First Habib Islamic Income Fund
| Rating Type | Stability Rating | |
|
Current (16-Apr-20 ) |
Previous (17-Oct-19 ) |
|
| Action | Upgrade | Maintain |
| Long Term | AA(f) | A(f) |
| Short Term | - | - |
| Outlook | Stable | Stable |
| Rating Watch | - | - |
The rating reflects the funds strong credit risk profile. Majority of the investments are placed in low-risk avenues, with the duration of the fund kept under 60. At end Dec’19, majority of the fund's assets were invested as cash (~88%) and most of these were placed in 'AAA' rated banks (~65%). The fund has highly concentrated unit holding pattern, with top 10 investors representing ~87% of the fund size at end Dec’19.
Going forward, the management intends to maintain funds allocation towards cash placements in 'AA' and above rated banks. Investments in Government-guaranteed Sukuks might be made in order to diversify the portfolio holdings. Material changes in the fund's asset allocation strategy, which could negatively impact the fund's credit quality and exposure to interest rate risk, remain critical for the rating.
About
the Entity
Habib Asset Management Limited incorporated in September 2005 as an unlisted public limited company. The Company 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. Bank Al Habib is in the process of acquiring 100% stake in the Company. The Company aims to create synergies from the acquisitions and hopes to increase the market share after using the Banks network to target prospective clients.
HAML’s BoD consists of six members, including the CEO. The Chairman of the Board, Mr. Ali Raza D. Habib has extensive experience in the Capital Markets of Pakistan. The Company is currently managing six open-end funds with AUM’s of ~PKR 6.96bln at end Dec’19.