The Pakistan Credit Rating Agency Limited
12-Jul-17
Analyst
Mohsin Naseer
mohsin.naseer@pacra.com
+92-42-35869504
www.pacra.com
Applicable Criteria
- Asset Manager Rating Methodology | Jun-16
- Methodology | Debt Instruments Rating Methodology | Jun-17
Related Research
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PACRA Maintains Stability Rating of MCB Cash Management Optimizer Fund
| Rating Type | Stability Rating | |
|
Current (12-Jul-17 ) |
Previous (09-Dec-16 ) |
|
| Action | Maintain | Maintain |
| Long Term | AA(f) | AA(f) |
| Short Term | - | - |
| Outlook | Stable | Stable |
| Rating Watch | - | - |
The investment objective of the fund is to earn a reasonable rate of return through construction of a highly liquid and low risk portfolio comprising treasury bills, money market placements and bank deposits.
The rating reflects the fund's low risk profile emanating from its portfolio allocation towards low risk avenues. At end-May-17, exposure in Government securities was mere 1.3% whereas, remaining assets of the fund were invested as cash (87%) and TDRs with banks rated AA & above. The exposure with AAA banks was 20%, whereas, exposure with 'AA+' rated banks was 78% and 0.6% with banks rated 'AA'. The unit holding pattern of the fund emanates high liquidity risk as top10 investors represent 63% of the fund's assets.
Going forward, the rating remains dependent on maintaining exposure with high credit quality financial institutions with portfolio duration not exceeding 90 days. Meanwhile, the remaining assets of the fund must be placed with scheduled banks having credit ratings 'AA' and above. PACRA would monitor compliance against agreed parameters on monthly average basis.
About
the Entity
MCBAH is a subsidiary of MCB Bank Limited (MCB). MCB holds majority stake (51%) in the company, followed by Arif Habib Corporation Limited (30%). The company is managing fourteen open end mutual funds along with two pension schemes with AUMs of ~ PKR 47bln at end-Mar17. MCBAH also manages an SMA portfolio of ~ PKR 24bln. Sizeable chunk of this portfolio is related to an associated company. MCB, the fourth largest bank in Pakistan in terms of asset size and branch network, has a very strong financial position, evidenced by a long-term entity rating of AAA by PACRA. Arif Habib Corporation is the holding company for Arif Habib Group with interests in the financial and industrial sectors.
MCBAH’s eight members BoD, three representatives from MCB including CEO, two representatives from AHG and three are independent. Mian Muhammad Mansha - Chairman MCB - serves as the Chairman on the board. Mr. Nasim Beg - a representative of AHG - acts as the Vice Chairman. Mr. Saqib Saleem, former Chief Operating Officer and Company Secretary, is leading the AMC as Chief Executive Officer.