The Pakistan Credit Rating Agency Limited
18-Oct-24
Analyst
Hassaan Ahmad
Hassaan.Ahmad@pacra.com
+92-42-35869504
www.pacra.com
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Related Research
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PACRA Maintains Stability Rating of Atlas Islamic Income Fund
| Rating Type | Stability Rating | |
|
Current (18-Oct-24 ) |
Previous (18-Apr-24 ) |
|
| Action | Maintain | Maintain |
| Long Term | AA-(f) | AA-(f) |
| Short Term | - | - |
| Outlook | Stable | Stable |
| Rating Watch | - | - |
Atlas Islamic Income Fund ("AIIF" or the "Fund") is a medium risk profile Fund. The investment objective of the Fund is to seek preservation of capital and reasonable rate of return from a broadly diversified portfolio of long, medium and short term, high quality Islamic income instruments. The assigned rating reflects the Fund's low credit and interest rate risk profile emanating from its investment strategy. The Fund had allocated ~38.8% in Ijara Sukuks, ~27.9% in Bank deposits, ~27.3% in Corporate Sukuks and ~6.0% was invested in others. At end Jun-24, most of the investments was held in Govt Sec/AAA rated avenues (~40.3%), ~28.9% in A+ rated, ~20.3% in AA, ~6.2% in AA+, ~3.7% in A rated, while the rest ~0.6% was invested in AA- rated avenues. The WAM of the Fund was 352 days in Jun'24, exposing the Fund to high credit rate risk. The Duration of the Fund stood at 50 days in Jun'24; limiting the interest rate risk of the fund. The top 10 investors concentration of the Fund, at Jun'24 were ~51.23% exposing the Fund to high redemption pressure. The redemption pressure is addressed through maintenance of sufficient liquidity.
Going forward, the material changes in the Fund's asset allocation strategy, which could impact the Fund's credit quality and exposure to interest rate risk, would remain critical for the rating.
About
the Entity
AAML, incorporated in August 2002, is a wholly owned subsidiary of Shirazi Investments (Pvt.) Limited – the holding company of Atlas Group. Atlas Group, founded in 1962 with the establishment of Shirazi Investments, is a diversified group with having presence in manufacturing, power, financial services, and trading. The Company’s seven-member Board of Directors comprises five representatives of Atlas Group including the CEO, the other two are independent directors. Mr. Iftikhar H. Shirazi serves as the Chairman of the Board of Directors of AAML along with several other companies of the Group. The board has three committees to provide oversight on the Company’s affairs: 1) Audit Committee, 2) Human Resource & Remuneration Committee, and 3) Investment Committee. The Company had AUMs of PKR 88.456bln at end Jun'24.