The Pakistan Credit Rating Agency Limited
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Madiha Sohail

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PACRA Maintains Stability Rating of NBP Government Securities Liquid Fund

Rating Type Stability Rating
(29-Sep-21 )
(29-Mar-21 )
Action Maintain Maintain
Long Term AAA(f) AAA(f)
Short Term - -
Outlook Stable Stable
Rating Watch - -

NBP Government Securities Liquid Fund (or the ‘Fund’) is a low risk-profile fund. The assigned rating reflects moderate strength of the fund's credit and interest rate risk profile. The investment policy holds that the Fund must invest only in securities issued by the government. Moreover, deposits are only kept in Banks with a minimum rating of 'AA'. At the end of Jun'21, T bills with 3 month maturity consisted of 99.64% of the net assets. Considerable holding of Government Securities mitigates the credit risk. The WAM has been parameterized by 90 days and as of Jun'21, the fund's WAM was well within the limit at 57 days. Further, the duration of the Fund remained at an average of 57 days and as such does well to minimize exposure to interest rate risk. Therefore, the liquidity risk of the fund appears to be mitigated successfully. The top 10 investors possess a concentration of 68.54% in the fund's total assets. Therefore, the fund is subject to high redemption pressure.
Going forward, the Fund may increase its asset allocation in Government Securities. Material changes in the Fund'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 of Directors includes three independent directors and the CEO. With overall assets under management of PKR 168,016mln at end-Jun'21, the Company is currently managing a diversified fund slate of twenty eight open-end mutual funds, two voluntary pension schemes and an Exchange Traded Fund.

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.