The Pakistan Credit Rating Agency Limited
04-Dec-18
Analyst
Ayesha Qasim
ayesha.qasim@pacra.com
+92-42-35869504
www.pacra.com
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Related Research
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PACRA Maintains Stability Rating of NAFA Financial Sector Income Fund
| Rating Type | Stability Rating | |
|
Current (04-Dec-18 ) |
Previous (30-Jun-18 ) |
|
| Action | Maintain | Maintain |
| Long Term | A+(f) | A+(f) |
| Short Term | - | - |
| Outlook | Stable | Stable |
| Rating Watch | - | - |
The fund's objective is to provide income enhancement and preservation of capital by investing in prime quality Financial Sector TFCs/Sukuks, Bank deposits and short-term money market instruments.
The rating reflects the fund's good credit quality, modest liquidity profile and its mandate of maintaining minimum exposure of 70% at all times in the financial sector. At end-Jun 18, the portfolio of the fund was primarily invested as banking deposits and placements ~76%. This exposure is mainly with banks rated 'AAA' 21%. The remaining assets of the fund were invested with debt securities (TFCs:23% - A+ and above). Exposure to interest rate risk is moderate as the duration of the fund is 46 days. The unit holding pattern of the fund is moderately concentrated with top 10 investors representing 50% of the fund's assets.
Going forward, the fund plans to keep its allocation to debt instruments, while the remaining assets will be invested in banks with rating 'A-' and above. 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
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 Baltoro Growth Fund ~36% stake which they acquired from Alexandra Fund Management Pte. Ltd. The CEO of NBP Fund Management Limited, Dr. Amjad Waheed, also holds a 10% stake in the company.
The company’s nine-member Board of Directors include three independent directors and the CEO. During the year Mr. Mudassir Husain Khan and Mr. Tariq Jamali joined the company’s board as a Non-Executive director, both are the representatives of the bank. The company is currently managing a diversified fund slate of twenty-five funds.