The Pakistan Credit Rating Agency Limited
18-Apr-19
Analyst
Ayesha Qasim
ayesha.qasim@pacra.com
+92-42-35869504
www.pacra.com
Applicable Criteria
Related Research
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PACRA Maintains Stability Rating of NAFA Government Securities Savings Fund
| Rating Type | Stability Rating | |
|
Current (18-Apr-19 ) |
Previous (04-Dec-18 ) |
|
| Action | Maintain | Maintain |
| Long Term | AA-(f) | AA-(f) |
| Short Term | - | - |
| Outlook | Stable | Stable |
| Rating Watch | - | - |
The fund's objective is to provide a competitive return from the portfolio of low credit risk by investing primarily in Government Securities.
The rating reflects the fund's good credit quality and sound liquidity profile emanating from its investment policy to invest majority of its net assets in Government Securities (T-bills) and remaining investments will be in bank deposits. At end-Dec 18, 41% of the fund’s assets were invested in Government securities. The remaining assets of the fund were invested with banks as banking deposits with majorly 'A+' and above. The weighted average maturity of the fund was 42 days in Dec-18. The unit holding pattern of the fund is concentrated with top 10 investors representing ~82% of the fund's assets, (of which ~51% are owned investments) which exposes the fund to a low level of redemption pressure.
Going forward the fund intends to maintain its allocation towards government securities (T-bills) and cash balance with a minimum rating of '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, remain critical for the rating.
About
the Entity
NBP Fund Management Limited, established in 2005, is licensed by Securities and Exchange Commission (SECP) to carry out asset management and investment advisory business. National Bank of Pakistan is the largest shareholder of the company with a stake of ~54%. During the year, Baltoro Growth Fund acquired the entire (36%) stake of Alexandra Fund Management Pte. Ltd. in the company. Baltoro Capital is a Pakistan focused private equity firm. Baltoro has made three investments in the pharmaceutical, renewable energy and financial services sectors. It is actively deploying its funds in businesses positioned to achieve extraordinary growth. 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, there has been some new induction in the Board of Directors. The company is currently managing a diversified fund slate of twenty-six mutual funds and two pension funds.