The Pakistan Credit Rating Agency Limited
29-Sep-21
Analyst
Madiha Sohail
madiha.sohail@pacra.com
+92-42-35869504
www.pacra.com
Applicable Criteria
Related Research
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PACRA Maintains Stability Rating of NBP Government Securities Savings Fund
| Rating Type | Stability Rating | |
|
Current (29-Sep-21 ) |
Previous (29-Mar-21 ) |
|
| Action | Maintain | Maintain |
| Long Term | AA-(f) | AA-(f) |
| Short Term | - | - |
| Outlook | Stable | Stable |
| Rating Watch | - | - |
NBP Government Securities Savings Fund(or the ‘Fund’) is 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 minimum requirements of the fund entails that at least 70% must be invested in Government Securities. At the end of Jun'21, the total bank deposits were 41.9% of the net assets, with the banks rated ’AA+’ and above. Moreover, the fund's PIBs consisted of 24.2%. T‐Bills constituted 32.3% of the total assets. The WAM has been parameterized by 4 years and as of Jun'21, WAM was well within the prescribed limit at 183 days. Therefore, the credit risk of the fund appears to be mitigated successfully. Furthermore, the duration of the fund has been parameterized by a limit of 1 year and as of June'21, has done well to keep the duration with 174 days. The top 10 investors possess a concentration of 46.22% in the fund's total assets. Therefore, the fund is subject to moderate redemption pressure.
Going forward, the Fund may increase its asset allocation towards government securities as mandated by its investment policy, depending on market situation. 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.