PACRA Upgrades Stability Rating of NBP Islamic Savings Fund

Lahore, September 23, 2020 (PPI-OT): The rating captures the essence of change in the investment policy framework of the fund. This has reduced the overall risk profile of the fund. The fund has mandate to invest primarily in Shariah compliant money market instruments and bank deposits. The fund will invest in money market instruments rated ‘AA-‘ and above. The placement of funds in Riba free deposits with Islamic banks/Islamic window of conventional banks, other than TDR, will be in higher of the ‘A’ spectrum. The credit risk is expected to remain on the lower side.

At the same time, the fund policy dictates higher allocation to liquid avenues. This enhances the liquidity profile of the fund. At end Jun’20, the fund had invested ~90% of funds with banks and DFI’s mostly rated ‘AA-‘ and above. The fund also had an exposure of ~10% in Islamic commercial papers rated ‘AA+’ and above. The unit holding pattern of the fund is properly diversified, top ten investors represent ~17% of the funds assets which reduces the redemption pressure.

Going forward, the fund intends to maintain its current asset allocation and the deposit with banks will be made in low credit risk avenues (mostly in AA category and occasionally higher spectrum of A). Material changes in the fund’s asset allocation strategy, which could negatively impact the fund’s credit quality and exposure to interest rate risk, remain critical for the rating.

For more information, contact:
The Pakistan Credit Rating Agency Limited (PACRA)
Awami Complex, FB1, Usman Block New Garden Town,
Lahore – Pakistan
Tel: +9242 586 9504 -6
Fax: +9242 583 0425