The Pakistan Credit Rating Agency Limited
30-Jun-18
Analyst
Shahzaib Khalid
shahzaib.khalid@pacra.com
+92-42-35869504
www.pacra.com
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PACRA Maintains Stability Rating of NAFA Income Fund
| Rating Type | Stability Rating | |
|
Current (30-Jun-18 ) |
Previous (12-Jul-17 ) |
|
| Action | Maintain | Maintain |
| Long Term | A(f) | A(f) |
| Short Term | - | - |
| Outlook | Stable | Stable |
| Rating Watch | - | - |
The investment objective of the fund is to earn competitive rate of return for its unit holders by investing in money market and debt securities having good credit quality.
The rating reflects average credit quality, moderate exposure against interest rate volatility, and diversified sectoral exposure in assets. At end-Dec17, fund's exposure with Government securities was 3%, exposure towards banks placement was (66%), and TFC (12%). The unit holding pattern of the fund is concentrated with top10 investors representing 95% of the fund's assets, (of which ~64% are owned investments) which exposes the fund to a low level of redemption pressure.
Going forward the fund intends to maintain its allocation to good quality debt instruments (25%) with the remaining assets invested in government securities and cash balance with a minimum rating of 'A' and above. 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
NBP Fund Management Limited (Formerly: NBP Fullerton Asset Management Limited), established in 2005, is licensed by Securities and Exchange Commission (SECP) to carry out asset management and investment advisory business. NBP is the largest shareholder of the AMC with a stake of ~54%, followed by Alexandra Fund Management Pte. Ltd ~36% stake. The CEO of NBP Fund, Dr. Amjad Waheed, also holds a stake of 10% in the company.
Company nine-member Board of Directors comprise the company’s CEO, three representatives of NBP, two representatives of FFMG and three independent directors. During the year Mr. Mudassir Husain Khan and Mr. Tariq Jamali joined the company’s board as a Non-Executive directors, both are the representatives of the bank. The company is currently managing a diversified fund slate of twenty funds in the categories of asset allocation, income, equity and money market.