The Pakistan Credit Rating Agency Limited
30-Jun-18
Analyst
Shahzaib Khalid
shahzaib.khalid@pacra.com
+92-42-35869504
www.pacra.com
Applicable Criteria
Related Research
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PACRA Maintains Stability Rating of NAFA Saving Plus Fund
| Rating Type | Stability Rating | |
|
Current (30-Jun-18 ) |
Previous (12-Jul-17 ) |
|
| Action | Maintain | Maintain |
| Long Term | AA-(f) | AA-(f) |
| Short Term | - | - |
| Outlook | Stable | Stable |
| Rating Watch | - | - |
The investment mandate of the fund is to earn a reasonable rate of return with minimal risk while ensuring capital protection by investing in a portfolio primarily comprising bank deposits and money market instruments.
The rating reflects fund's good credit quality, sound liquidity profile. The fund's low risk emanates from its investment policy of maintaining a sizeable proportion of placements with commercial banks pre dominantly rated in 'AA-' and 'A+' category. At end-Dec 17, fund's exposure with Bank was 83%, MTS was 11% and T-Bills was 5%. The majority of the exposure was with 'AA-' rated banks (i.e. 44%). The other major avenue is MTS, which due to self-liquidating nature possesses less risk over short tenure. The fund's unit holding pattern remains adequately diversified with top10 investors representing 51% of the fund's assets at end-Dec-17.
Going forward, the fund intends to maintain its investments in Government securities (20%), Margin Financing (40%) with rest of the assets invested in cash and placements with good quality banks and NBFIs. Material changes in the fund's asset allocation strategy, which could negatively impact the fund's credit quality and exposure to interest rate risk, remain critical for the rating.
About
the Entity
NBP Fund Management Limited (Formerly: NBP Fullerton Asset Management Limited), established in 2005, is licensed by Securities and Exchange Commission (SECP) to carry out asset management and investment advisory business. NBP is the largest shareholder of the AMC with a stake of ~54%, followed by Alexandra Fund Management Pte. Ltd ~36% stake. The CEO of NBP Fund, Dr. Amjad Waheed, also holds a stake of 10% in the company.
Company nine-member Board of Directors comprises the company’s CEO, three representatives of NBP, two representatives of FFMG and three independent directors. During the year Mr. Mudassir Husain Khan and Mr. Tariq Jamali joined the company’s board as a Non-Executive directors, both are the representatives of the bank. The company is currently managing a diversified fund slate of twenty funds in the categories of asset allocation, income, equity and money market.