The Pakistan Credit Rating Agency Limited
17-Feb-21
Analyst
Muhammad Zain Ayaz
zain.ayaz@pacra.com
+92-42-35869504
www.pacra.com
Applicable Criteria
Related Research
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PACRA maintains Stability Rating of Pak Oman Advantage Islamic Income Fund
| Rating Type | Stability Rating | |
|
Current (17-Feb-21 ) |
Previous (15-Sep-20 ) |
|
| Action | Maintain | Upgrade |
| Long Term | A+(f) | A+(f) |
| Short Term | - | - |
| Outlook | Stable | Stable |
| Rating Watch | - | - |
The rating incorporates Pak Oman Advantage Islamic Income Fund's (or the "Fund") moderate risk level. The ratings also incorporates the Fund's objective to provide competitive returns and long term capital growth by investing in diversified portfolio of Shariah Compliant Securities. The asset allocation comprises of ~40% as cash placements, ~26% invested in Sukuks having minimum credit rating of 'A+', and 32% of funds invested in GOP Ijara Sukkuks having rating of 'AAA'. The average duration of the fund was 535 days at end Dec'20. The unit holding pattern of the fund is highly concentrated where ~89% is represented by top 10 investors. However, ~76% of the fund size are investments made by the Management Company itself and related parties which reduces the risk of redemption pressure. During 1HFY21, the Fund's performance remained above benchmark.
Going forward, the management of the fund intends to maintain its exposure in debt instruments which may impact the duration. Meanwhile, the fund plans to remain invested in sound credit quality banks. 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 (97%). The remaining shareholders include Oman International Development Company (1.2%), Bank Muscat (0.6%) and National Logistic Cell (1.2%). The Company’s Board of Directors comprises six members including the managing director of Pak Oman Investment Company, Mr. Bahauddin Khan. The board’s chairman H.E. Yahya Bin Said Bin Abdullah Al-Jabri is the Minister of the Special Economic Zone Authority at A’Duqum, Sultanate of Oman. The Company’s diverse product slate includes eight open-end funds, six conventional and two shariah compliant funds, with AUM’s of ~PKR 6.6bln as at Dec'20.