The Pakistan Credit Rating Agency Limited
28-Aug-20
Analyst
Afnan Iqbal
afnan.iqbal_old@pacra.com_old
+92-42-35869504
www.pacra.com
Applicable Criteria
Related Research
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 Plan - I
| Rating Type | Stability Rating | |
|
Current (28-Aug-20 ) |
Previous (28-Feb-20 ) |
|
| Action | Maintain | Maintain |
| Long Term | AA-(f) | AA-(f) |
| Short Term | - | - |
| Outlook | Stable | - |
| Rating Watch | - | - |
The rating reflects the strength of the plan's credit and liquidity risk profile. The plan's good credit quality and sound liquidity profile emanates primarily from its mandate to invest at least 90% of its AUMs in Government Securities. At end Jun'20, 88% of plan's assets were invested in PIBs, whereas 12% of exposure was maintained in T-Bills. In FY20, average duration of the plan remained high at 444 days, exposing it to interest rate risk. However, the PIBs will be held to maturity, eliminating the impact of interest rate volatility on the plan's NAV. Due to the declining policy rates in 1HCY20, the plan generated a return of ~18.4% in FY20 and outperformed the benchmark and peer average. The plan's unit holding pattern is highly concentrated with top 10 investors representing ~96% of the net assets. The plan is set to mature on July 12, 2021.
Going forward, the plan intends to maintain its asset allocation in government securities, while keeping the remaining fund's as bank placement's. Material changes in the plan'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 comprises the CEO, three representatives of National Bank of Pakistan, two representatives of Baltoro Growth Fund and three independent directors. With overall assets under management of PKR 126,853mln at end Jun'20, the Company is currently managing a diversified fund slate of twenty seven open-end funds and two voluntary pension schemes under twelve different categories.