The Pakistan Credit Rating Agency Limited
18-Oct-21
Analyst
Madiha Sohail
madiha.sohail@pacra.com
+92-42-35869504
www.pacra.com
Applicable Criteria
Related Research
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PACRA Maintains Stability Rating of NBP Islamic Income Fund
| Rating Type | Stability Rating | |
|
Current (18-Oct-21 ) |
Previous (16-Apr-21 ) |
|
| Action | Maintain | Maintain |
| Long Term | A(f) | A(f) |
| Short Term | - | - |
| Outlook | Stable | Stable |
| Rating Watch | - | - |
The assigned rating reflects the Fund's moderate credit risk and interest rate risk profile emanating from its investment strategy to invest in adequate credit quality and longer duration investment avenues having sound liquidity. The Fund had placed 44.3% of assets as daily product with banks mostly rated 'AAA'. 23% of the total assets were invested as term deposits with banks rated ‘AAA’ (10%) and ‘A+’ (13%). Remaining assets of the Fund were invested with Sukuks and Commercial Paper rated AA and AA+ respectively. The Fund's investment policy (IP) allows the fund to take 100% exposure in 'A‐' rated investment avenues of up to 90 days maturity. The Fund shall place minimum 25% of assets in Riba free accounts of Islamic banks. This is expected to allow the Fund to maintain a strong liquidity profile. The average duration of the Fund remained at 36 days, at end Jun'21 which protects the Fund from exposure against interest rate risk
Going forward, 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
NBP Fund Management Limited (or the "Company"), 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%. In 2019, Baltoro Growth Fund has acquired the entire 36% stake of Alexandra Fund Management Private Limited in the Company. Baltoro Capital is a Pakistan focused private equity firm. Baltoro Capital has made investments in the pharmaceutical, renewable energy and financial services sectors in Pakistan. It is actively deploying its funds in businesses positioned to achieve extraordinary growth. The CEO of NBP Fund Management Limited, Dr. Amjad Waheed, CFA and family also holds a 10% stake in the company.
The Company’s nine-member Board of Directors includes three independent directors and the CEO. With overall assets under management of PKR 168,016mln at end-Jun'21, the Company is currently managing a diversified fund slate of twenty eight open-end mutual funds, two voluntary pension schemes and an Exchange Traded Fund.