The Pakistan Credit Rating Agency Limited
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Madiha Sohail

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PACRA Maintains Stability Rating of NBP Government Securities Liquid Fund

Rating Type Stability Rating
(28-Sep-23 )
(28-Mar-23 )
Action Maintain Maintain
Long Term AAA(f) AAA(f)
Short Term - -
Outlook Stable Stable
Rating Watch - -

NBP Government Securities Liquid Fund (or the "Fund") is a very low-risk profile fund. The objective of the Fund is to generate optimal return with minimum risk to provide easy liquidity and reasonable income to its unit holders by investing primarily in short-term Government Securities. As of Jun'23, the Fund had invested ~88.5% in T-Bills and ~9.9% of cash in mainly AA and above-rated banks. The duration and WAM of the Fund stood at 45 days at the end of Jun’23. The exposure of the Fund to credit risk, liquidity risk and interest rate risk is exceptionally low due to minimum 70% investment in Government Securities (T-Bills) with average maturity of the overall portfolio at 6 days. The unit holding pattern of the Fund stood at ~60.36% at the end of Jun’23, representing top ten investor concentration; exposing the Fund to redemption pressure. However, the ability to meet redemption remained sound on the back of strong liquid profile. During FY23, the Fund remained compliant with the credit quality criteria barring a minor deviation in a month.
The Fund's performance during FY23 beat the benchmark and gave an annualized return of 17.8%.
Going forward, any material changes in the investment policy or the devised rating criteria for the assigned rating would have an impact on the ratings. Risk may vary slightly from time to time considering the volatility of economic conditions.

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 ~238bln at end-Jun'23, the Company is currently managing a diversified fund slate of twenty five open-end mutual funds, two voluntary pension schemes and one Exchange Traded Fund.

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.