The Pakistan Credit Rating Agency Limited
08-Mar-24
Analyst
Madiha Sohail
madiha.sohail@pacra.com
+92-42-35869504
www.pacra.com
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Related Research
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PACRA Maintains Stability Rating of MCB DCF Income Fund
| Rating Type | Stability Rating | |
|
Current (08-Mar-24 ) |
Previous (08-Sep-23 ) |
|
| Action | Maintain | Maintain |
| Long Term | AA-(f) | AA-(f) |
| Short Term | - | - |
| Outlook | Stable | Stable |
| Rating Watch | - | - |
MCB DCF Income Fund (or the "Fund") reflects the Fund's low-risk profile. The investment objective of the Fund is to deliver superior fixed income returns by investing in an optimal mix of authorized debt instruments while taking into account capital security and liquidity considerations. The credit quality of the Fund was ~61.7% in AAA, 34.9% in AA+, ~0.5% in AA, ~0.4% in AA- and ~0.1% in A. At the end of Dec’23, the Fund had allocated ~36.8% in Banks. Whereas ~29.6% was invested in T-Bills, ~21.6% in PIBs, ~3.3% in TFCs/Sukuks, ~6.5% in GoP Ijara Sukuk and remaining was invested in Others. The AUMs of the Fund stood at PKR 12,669mln at the end of Dec’23. While the WAM of Fund is also stood at 986 days, exposing the Fund to high credit risk. The increase in WAM is due to long-term investment in long term Govt Securities. The Duration of the fund stood at 232, exposing the fund to interest rate risk. The top 10 Investor Concentration stood at 12.36% at end Dec'23, keeping the redemption pressure low.
Going forward, following the investment policy and market circumstances, the Fund may increase exposure in banks, spread transactions and short-term government papers. 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
MCB Investment Management Limited (MCBIM or the "Company") is a Public Listed Company, regulated by the SECP. MCBIM holds licenses for Asset Management, Investment Advisory, and Pension Fund Management. MCBIM caters to both conventional and Shariah-compliant clientele and is currently managing a diverse product slate of nineteen open-end funds and four voluntary pension schemes. MCBIM is also managing one of the largest AUMs under the SMA segment and holds a significant position in the investment advisory domain.
The major shareholders of MCBIM are MCB Bank Limited ~81.42%, and Adamjee Insurance Company Limited ~7.59%. The general public holds the remaining ~11% of the shares. Mr. Khawaja Khalil Shah is the CEO of the company. There are four non-executive directors, three directors are independent and one CEO. The AUMs of MCBIM stood at PKR 164bln at end-Dec'23