The Pakistan Credit Rating Agency Limited
16-Apr-20
Analyst
Madiha Sohail
madiha.sohail@pacra.com
+92-42-35869504
www.pacra.com
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Related Research
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PACRA Downgrades Stability Rating of BMA Chundrigar Road Savings Fund
| Rating Type | Stability Rating | |
|
Current (16-Apr-20 ) |
Previous (17-Oct-19 ) |
|
| Action | Downgrade | Maintain |
| Long Term | A(f) | A+(f) |
| Short Term | - | - |
| Outlook | Stable | Stable |
| Rating Watch | - | - |
The rating reflects the fund's average credit quality and liquidity profile. At end Dec'19, the fund is invested in cash (89%), while the rest was mostly invested in TFC's. The Bank placements were made in A- rated banks, which has impacted the rating of the Fund. The unit holding pattern of the fund is highly concentrated with the top 10 investors representing 92% of the net assets. However, this risk is mitigated by sizeable investment (75%) of the AMC.
Going forward, the fund intends to maintain its exposure towards cash with banks rated A- and above. The main risk factors affecting the stability of returns are sensitivity of government securities to changes in interest rates. Material changes in the fund's asset allocation strategy, which could further impact the fund's credit quality and exposure to interest rate risk, remain critical for the rating.
About
the Entity
BMA Asset Management Company was incorporated in April 2005 and acquired the license for investment advisory and asset management in April 2005 and July 2005 respectively. The ex-CEO of the Company, Mr. Khaldoon bin Latif resigned in Nov-18 and the position of CEO is still currently vacant. The Company is in the process of hiring a new CEO and has filed documentation to the SECP. The management team comprises of seasoned professionals and the majority of the personnel have been associated with the Company for more than a decade.
The Company's four member board comprise two independent and two non-independent directors. Mr. Salim Khan was appointed as the chairman of the board in October 2017. He possesses vast experience in strategic human resource consultancy and organizational development. The Company has a limited fund slate, as they are currently managing two funds with AUMs ~PKR 254mln at end Dec’19.