The Pakistan Credit Rating Agency Limited
04-Dec-18
Analyst
Muhammad Usman
muhammad.usman@pacra.com
+92-42-35869504
www.pacra.com
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Related Research
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PACRA Maintains Stability Rating of NAFA Islamic Income Fund (Formerly: NAFA Islamic Aggressive 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 earn a reasonable rate of return in a Shariah-compliant manner by investing in Shariah-compliant debt securities, money market instruments and bank deposits.
The rating reflects strong credit quality of the fund. Currently, fund's exposure with sukuk is ~17%, while ~79% of the fund's assets are exposed towards banking deposits with banks rated 'A-' and above. Exposure with 'AAA' rated banks was ~31% whereas with A+ and A- rated banks exposure was ~10% and ~43% respectively at end-Jun 18. The unit holding pattern of the fund is reasonably concentrated with top10 investors representing ~28% of the fund's total assets.
Going forward, the fund intends to reduce its allocation towards bank deposits. The remaining asset will be invested in Shariah-compliant government securities and good quality debt instruments. 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 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.