logo
The Pakistan Credit Rating Agency Limited
Press Release

Date
30-Jun-18

Analyst
Muhammad Usman
muhammad.usman@pacra.com
+92-42-35869504
www.pacra.com

Applicable Criteria

Related Research

Disclaimer
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 Pak Oman Advantage Islamic Income Fund

Rating Type Stability Rating
Current
(30-Jun-18 )
Previous
(12-Jul-17 )
Action Maintain Maintain
Long Term A(f) A(f)
Short Term - -
Outlook Stable Stable
Rating Watch - -

The mandate of the fund is to provide a reasonable rate of return to its unitholders and long-term capital growth by investing primarily in a diversified portfolio of Shariah-compliant investment instruments.

The rating incorporates the change in fund's investment philosophy. At end-Dec17, fund's exposure with cash balances was 56% while remaining assets of the fund were invested in sukuks (i.e. 42%). Majority of the fund's assets were invested with 'A-' rated avenues. The unit holding pattern of the fund is concentrated with top10 investors representing 99% of the fund's assets, (of which ~54% are owned investments) which exposes the fund to a low level of redemption pressure.

Going forward, the management of the fund intends to gradually build a portfolio of enhanced exposure to government securities. Meanwhile, the fund plans to remain invested in strong credit quality banks. Material changes in the fund's asset allocation strategy, which could negatively impact the fund's credit quality and exposure to interest rate risk, remains critical for the rating.

About the Entity
Pak Oman Asset Management Company Limited was incorporated on July 28, 2006, as a public unlisted company. It is licensed by the Securities and Exchange Commission of Pakistan (SECP) to carry out asset management and investment advisory services under the Non-Banking Finance Companies Regulations. During the year, the company remained a majority-owned subsidiary of Pak Oman Investment Company Limited (97%). The remaining shareholders include Oman International Development Company (1.2%), Bank Muscat (0.6%) and National Logistic Cell (1.2%).

The company’s Board of Directors (BoD) currently comprise eight members including the CEO, Mr. Adeel Ahmad Khan. The board’s chairman H.E. Yahya Bin Said Bin Abdullah Al-Jabri belongs to the Omanian royal family. The company’s diverse product slate includes eleven open-end funds as at March-18 belonging to all major categories. Pak Oman has four open-end funds under its name, while seven open-end funds belonged to Askari Investment Management Limited which have now been acquired by Pak Oman.

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.