The Pakistan Credit Rating Agency Limited
09-Mar-22
Analyst
Muhammad Junaid
muhammad.junaid@pacra.com
+92-42-35869504
www.pacra.com
Applicable Criteria
Related Research
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PACRA Maintains Stability Rating of MCB Pakistan Sovereign Fund
| Rating Type | Stability Rating | |
|
Current (09-Mar-22 ) |
Previous (09-Sep-21 ) |
|
| Action | Maintain | Maintain |
| Long Term | AA-(f) | AA-(f) |
| Short Term | - | - |
| Outlook | Stable | Stable |
| Rating Watch | - | - |
MCB Pakistan Sovereign Fund (or the ‘Fund’) is a medium risk-profile fund. The assigned rating reflects the strong strength of the Fund's liquidity and credit risk profile and moderate strength of the interest rate risk profile. At end-Dec'21, the Fund had allocated ~53% of its net assets in banks rated AA- and above. The Fund had also invested ~46% of AUMs in government securities. The Fund’s weighted average maturity was 3.4 years as of end-Dec’21, which is in line with investment policy. At end-Dec'21, the duration of the fund was within 60 days, limiting the Fund's exposure to interest rate risk. The unit holding pattern of the Fund is moderately concentrated with top ten investors representing ~51% of the Fund's assets, which exposes the Fund to a moderate level of redemption pressure.
Going forward, the Fund intends to maintain its asset allocation in government securities and banks, however, the allocations may be changed based on market circumstances. Material changes in the Fund's asset allocation strategy, impacting its credit quality and/or average duration, would affect the rating.
About
the Entity
MCB-Arif Habib Limited Savings and Investments Limited (MCB-AH or the "Company") is a public listed company, regulated by the SECP. MCB-AH holds licenses for Asset Management, Investment Advisory, and Pension Fund Management. MCB-AH caters to both conventional and Shariah-compliant clientele and is currently managing a diverse product slate of fifteen open-end funds and two voluntary pension schemes. MCB-AH is also managing one of the largest AUMs under the SMA segment and holds a significant position in the investment advisory domain.
The major shareholders of MCB-AH are MCB Bank Limited ~51%, Arif Habib Corporation Limited ~30%, and Adamjee Insurance Company Limited ~8%. The general public holds the remaining ~11% of the shares. Mr. Saqib Saleem is the CEO of the Company. MCB-AH's control vests in an eight-member board of directors, including the CEO. There are four non-executive directors, while three directors are independent. The AUMs (CIS & VPS) of MCB-AH increased to ~PKR 110,012mln at end-Dec'21 (Jun'21: ~PKR 97,679mln).