The Pakistan Credit Rating Agency Limited
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Afnan Iqbal

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PACRA Maintains Stability Rating of MCB Pakistan Sovereign Fund

Rating Type Stability Rating
(24-Dec-19 )
(27-Jun-19 )
Action Maintain Maintain
Long Term AA-(f) AA-(f)
Short Term - -
Outlook Stable Stable
Rating Watch - -

The rating reflects the strength of the fund's credit and interest rate risk profile. The fund's good credit quality and sound liquidity profile emanates primarily from its mandate to invest in government securities and other low duration avenues such as bank placement's and ensuring low exposure to interest rate risk. At end-Jun'19, 58% of fund's assets were allocated to bank placements, whereas 41% to T-Bills. Fund's unit holding pattern is moderately concentrated with top 10 investors representing 49% of the net assets.
Going forward, the fund intends to increase it's current exposure in T-Bills. Material changes in the fund's asset allocation strategy, impacting it's credit quality and/or exposure to interest rate risk, would affect the rating.

About the Entity
MCB Arif Habib Savings and Investments Limited ("The Company" or "MCBAH") a subsidiary of MCB Bank Limited, was incorporated in August 2000 and is listed on the Pakistan Stock Exchange. MCBAH is a major player in the mutual fund industry of Pakistan. In June 2011, MCBAH was merged into Arif Habib Corporation Limited, with the objective of achieving synergies in asset management business and access to a wider distribution network.

The Company's Board comprises eight members including the CEO and Chairman. Two representatives are from MCB Bank Limited, two representatives from Arif Habib Corporation Limited, and three independent directors. Mian Muhammad Mansha, Chairman MCB, serves as the Chairman of the Board. Mr. Saqib Saleem is the CEO, possessing relevant experience of over thirteen years. With overall assets under management of ~PKR 57bln at end Nov-19, the Company is currently managing fifteen open-end funds and two voluntary pension schemes. The assets under management of separately managed accounts (SMA) were ~PKR 38bln at end Nov-19.

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.