The Pakistan Credit Rating Agency Limited
27-Sep-24
Analyst
Hassaan Ahmad
Hassaan.Ahmad@pacra.com
+92-42-35869504
www.pacra.com
Applicable Criteria
Related Research
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PACRA Maintains Stability Rating of NBP Financial Sector Income Fund
| Rating Type | Stability Rating | |
|
Current (27-Sep-24 ) |
Previous (28-Mar-24 ) |
|
| Action | Maintain | Maintain |
| Long Term | A+(f) | A+(f) |
| Short Term | - | - |
| Outlook | Stable | Stable |
| Rating Watch | - | - |
NBP Financial Sector Income Fund (or the Fund) is a moderate-risk profile fund. The investment objective of the Fund is to provide income enhancement and preservation of capital by investing in prime quality Financial Sector TFCs/Sukuks, Bank deposits and short-term money market instruments. The credit quality of the Fund was ~39.30% in AA rated avenue. ~30.10% in A, ~24.90% in AAA/ Government Securities and ~5.70% in others. At the end of Jun'24, the Fund had allocated ~72.8% in bank deposits, ~9.1% in T-bills, ~6.5% in sukuk, 3.4% invested in money market placement, ~3.2% in PIB’s whereas, remaining was invested in others. The duration of the Fund stood at 58 days at the end Jun’24, limiting the exposure to interest rate risk. The WAM of the Fund stood at 135 days at the end Jun’24, exposing the Fund to credit risk. At the end of Jun'24, the top ten investor concentration stood at ~58.95%, exposing the Fund to high redemption pressure. Redemption pressure is address through the maintenance of sufficient liquidity.
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.
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.
The Company’s nine-member Board of Directors includes three independent directors and the CEO. With overall assets under management of PKR ~346bln at end-Jun'24, the Company is currently managing a diversified fund slate of twenty-six open-end mutual funds, four voluntary pension schemes and one Exchange Traded Fund.