The Pakistan Credit Rating Agency Limited
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Muhammad Zain Ayaz

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PACRA Maintains Stability Rating of Pak Oman Government Securities Fund

Rating Type Stability Rating
(17-Aug-21 )
(17-Feb-21 )
Action Maintain Downgrade
Long Term A+(f) A+(f)
Short Term - -
Outlook Stable Stable
Rating Watch - -

The rating reflects Pak Oman Government Securities Fund's (or the "Fund") credit quality and liquidity profile emanating from the fund's policy to generate competitive return through investing primarily in government securities. At end Jun'20, ~21% of the fund's exposure was in Term Finance Certificates (TFCs) having rating 'A+' and above and ~78.5% invested in T-Bills. The unit holding pattern of the fund is highly concentrated with top ten investors representing 100% of the fund's assets, of which ~99% are own investments. The current investment strategy is in line with the investments policy, while the policy allows the Fund to invest its its up to 100% in government backed securities. During 2HFY21, the Fund under performed its benchmark and industry average. The Fund's duration has significantly decreased to 41 days (Dec'20: 212 days), this is due to the Fund's strategy to invest in shorter term T-Bills which were previously invested in longer term PIBs. this may reduce the interest rate and market risk.
Going forward, the rating remains dependent on maintaining at least 70% allocation towards government securities with portfolio duration not exceeding 2 years. Material changes in the fund's asset allocation strategy, impacting its credit quality and/or exposure to interest rate risk, would affect the rating.

About the Entity
Pak Oman Asset Management Company Limited was incorporated on July 28, 2006 as a public unlisted company. It is licensed by the Securities and Exchange Commission of Pakistan to carry out asset management and investment advisory services under the Non-Banking Finance Companies Regulations. The company is a majority owned subsidiary of Pak Oman Investment Company Limited (98%). The remaining shareholders include Oman International Development Company (0.84%), Bank Muscat (0.43%) and National Logistic Cell (0.84%).
The company’s Board of Directors comprise six members including the managing director of Pak Oman Investment Company, Mr. Bahauddin Khan. The board’s chairman H.H Juland Jaifer Salim Al-Said has over 15 years of experience at the Oman Investment Authority (OIA) (Previously known as State General Reserve Fund). The company’s diverse product slate includes eight open-end funds as at June'21 belonging to all major categories.

The primary function of PACRA is to evaluate the capacity and willingness of an entity to honor its obligations. Our ratings reflect an independent, professional and impartial assessment of the risks associated with a particular instrument or an entity. PACRA's comprehensive offerings include instrument and entity credit ratings, insurer financial strength ratings, fund ratings, asset manager ratings and real estate gradings. PACRA opinion is not a recommendation to purchase, sell or hold a security, in as much as it does not comment on the security's market price or suitability for a particular investor.