The Pakistan Credit Rating Agency Limited
17-Apr-19
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 Faysal Savings Growth Fund
| Rating Type | Stability Rating | |
|
Current (17-Apr-19 ) |
Previous (26-Dec-18 ) |
|
| Action | Maintain | Maintain |
| Long Term | AA-(f) | AA-(f) |
| Short Term | - | - |
| Outlook | Stable | Stable |
| Rating Watch | - | - |
The objective of the fund is to generate competitive returns by investing primarily in debt and fixed income instruments having an investment grade credit rating.
The rating reflects the fund's good credit quality and liquidity profile. At end-Dec-18, the portfolio is primarily invested in TFCs ~42% with a minimum A+ rating. The remaining assets are invested in daily cash balances and bank placements with ~41% of the portion in 'AA+' and ~11% in 'AA-' rated banks. The unit holding pattern of the fund is highly concentrated with top10 investors representing ~ 76% of the fund's assets, (of which ~34% are owned investments) which exposes the fund to a low level of redemption pressure.
Going forward, the fund intends to maintain exposure in government securities, margin trading system (MTS), corporate debt securities and cash balances. The rating is contingent upon the fund's interest rate sensitivity and volatility in prices of TFCs in case of exposure to low rated 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, remains critical for the rating.
About
the Entity
Faysal Asset Management Limited was incorporated in 2003 as an unlisted public limited company under the company's ordinance, 1984. The major shareholding lies with Faysal Bank Limited having almost the entire stake in the company. During Nov-18, Faysal Bank Limited acquired ~50% stake from Bahamas Ltd and 20% from Mr. Razi Ur Rahman Khan – the former CEO of the company. The company is managing a diversified portfolio of nine open-end funds having AUMs of ~PKR 9.3 billion at end-Dec'18.
The former CEO, Mr. Razi-ur-Rahman Khan left the company amid Nov-18. During Dec-18, Mr. Latif has been appointed as the new CEO of Faysal Asset Management Limited. Mr. Latif has been associated with the capital markets for fifteen years. Mr. Latif is a LUMS Alumni and has done a number of capital market courses with CFA association, Daiwa, J.P. Morgan and Bahrain Institute of Banking and Finance (BIBF). He has also completed his Director certification program from IBA.