The Pakistan Credit Rating Agency Limited
28-Sep-22
Analyst
Madiha Sohail
madiha.sohail@pacra.com
+92-42-35869504
www.pacra.com
Applicable Criteria
Related Research
This press release is being transmitted for the sole purpose of dissemination through print/electronic media. The press release may be used in full or in part without changing the meaning or context thereof with due credit to PACRA
PACRA Maintains Stability Rating of NBP Government Securities Liquid Fund
| Rating Type | Stability Rating | |
|
Current (28-Sep-22 ) |
Previous (29-Mar-22 ) |
|
| 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 very low risk-profile fund. The assigned rating reflects moderate strength of the fund's credit and interest rate risk profile. The Fund had invested 98% in Bank Alfalah Limited rated AA+ which shows high concentration risk. To mitigate the concentration risk, the management has plans to diversify its banking exposure by investing ~30% in three different triple AAA rated banks. The duration and WAM of the Fund stood at 1 day at the end Jun’22 (Dec’21: 12 days), limiting the exposure to interest rate and credit risk. The Fund’s top 10 investor concentration stood at 63% of net assets at end-Jun’22 out which ~23% of net assets are of relative party, which may subject the Fund to low redemption pressure.
Going forward, 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 177,186mln at end-Jun'22, the Company is currently managing a diversified fund slate of twenty five open-end mutual funds, two voluntary pension schemes and one Exchange Traded Fund.