The Pakistan Credit Rating Agency Limited
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Muhammad Junaid

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PACRA Upgrades Rating of NBP Income Opportunity Fund

Rating Type Stability Rating
(19-Apr-22 )
(18-Oct-21 )
Action Upgrade 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 aims to maximum possible preservation of capital and a reasonable rate of return via investing primarily in money market & debt securities having good credit rating and liquidity. During CY21, the Fund on average invested ~54% of net assets in Banks. The average allocation towards 'AA-' and above rated securities remained ~54% during CY21. At end-Dec'21, the Fund had invested ~80% of net assets in 'A+' and higher-rated banks. Whereas, ~12% of the net assets are invested TFCs/Sukuks rated 'AA' and higher. The duration remained at 19 days on average through out CY21. The duration of the Fund stood at 15 days reflecting relative immunity from interest rate risk. Whereas, the WAM of the Fund is a bit higher at 141 days due to investment in high-tenor corporate Sukuks. The average WAM was 197 days during CY21. The Fund has an impressive liquidity profile due to its substantial fund size and a moderate level of top 10 investor concentration, which stood at 36% at end-Dec'21
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.

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.