Analyst
Afnan Iqbal
afnan.iqbal_old@pacra.com_old
+92-42-35869504
www.pacra.com
Applicable Criteria
Related Research
PACRA Maintains Stability Rating of Pakistan Income Fund
Rating Type | Stability Rating | |
Current (24-Dec-19 ) |
Previous (27-Jun-19 ) |
|
Action | Maintain | Maintain |
Long Term | A+(f) | A+(f) |
Short Term | - | - |
Outlook | Stable | Stable |
Rating Watch | - | - |
The rating incorporates the fund's moderate credit quality and interest rate risk profile, emanating primarily from its mandate to invest in good quality and low duration avenues such as bank placement's and ensuring low exposure to interest rate risk. At end Jun'19, 63% of fund's assets were allocated to bank placements (banks rated 'AAA'), meanwhile, there was a high exposure towards debt securities, primarily TFCs (~35%) with minimum rating 'AA-' and above. Fund's unit holding pattern is highly concentrated with top 10 investors representing 30% of the net assets which exposes the fund to redemption pressure.
Going forward, the management of the fund intends to increase it's exposure in T-Bills. Material changes in the fund's asset allocation strategy, impacting it's credit quality and/or exposure to interest rate risk, would affect the rating.
About
the Entity
MCB Arif Habib Savings and Investments Limited ("The Company" or "MCBAH") a subsidiary of MCB Bank Limited, was incorporated in August 2000 and is listed on the Pakistan Stock Exchange. MCBAH is a major player in the mutual fund industry of Pakistan. In June 2011, MCBAH was merged into Arif Habib Corporation Limited, with the objective of achieving synergies in asset management business and access to a wider distribution network.
The Company's Board comprises eight members including the CEO and Chairman. Two representatives are from MCB Bank Limited, two representatives from Arif Habib Corporation Limited, and three independent directors. Mian Muhammad Mansha, Chairman MCB, serves as the Chairman of the Board. Mr. Saqib Saleem is the CEO, possessing relevant experience of over thirteen years. With overall assets under management of ~PKR 57bln at end Nov-19, the Company is currently managing fifteen open-end funds and two voluntary pension schemes. The assets under management of separately managed accounts (SMA) were ~PKR 38bln at end Nov-19.