The Pakistan Credit Rating Agency Limited
18-Oct-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 Income Opportunity Fund
| Rating Type | Stability Rating | |
|
Current (18-Oct-21 ) |
Previous (16-Apr-21 ) |
|
| Action | Maintain | Maintain |
| Long Term | A(f) | A(f) |
| Short Term | - | - |
| Outlook | Stable | Stable |
| Rating Watch | - | - |
NBP Income Opportunity Fund (or the "Fund") is a medium risk profile fund. The Fund's investment policy holds that a minimum of the Fund's total assets shall be invested in a minimum of 25% with respect to Cash and near Cash instruments. At end Jun'21, the total Cash balances were placed in banks mostly rated 'AA' and above. Furthermore, the total TFC's and Sukuks of the Fund constituted 22% of the total assets. The Sukuks were invested in Margin Financing with a rating of 'AA‐'. Moreover, the Fund's assets were divided by a percentage of 11.8% in Spread Transactions. The average duration has been parameterized by a limit of 2 years and the Fund does well to keep the duration at 22 days (At end Jun'21). This minimizes the Fund's exposure to interest rate risk. The Fund's unit holding pattern is moderately diversified with the top 10 investors contributing 34.52% of the total assets. Therefore, the Fund faces low to medium levels of redemption pressure.
Going forward, in accordance with the investment policy the fund intends to maintain its current asset allocation. 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.