Pakistan Credit Rating Agency assigns stability rating of ‘A+(F)’ to National Fullerton Asset Management

Karachi, July 06, 2012 (PPI-OT): The Pakistan Credit Rating Agency (PACRA) has assigned a stability rating of “A+(f)” (Single A Plus ; fund rating) to NAFA Financial Sector Income Fund (NFSIF), an open-end income fund.

The fund’s rating denotes a strong capacity to manage relative stability in returns and low exposure to risks.

The fund’s objective is to provide enhanced income ensuring capital preservation by investing in prime quality Financial and Corporate Sector TFCs/Sukuks, bank deposits and short-term money market instruments.

The rating reflects the fund’s strong credit quality, modest liquidity profile and its mandate of maintaining minimum exposure of 70%, at all times in the financial sector including TFCs/Sukuks [Minimum Rating - Entity: AA-, Instrument: A+ for banks and AA- for others], bank deposits [Minimum Rating: A] and other securities.

The remaining assets will be invested in a mix of GoP Securities (primarily T-Bills), money market placements and Non-banking/Corporate debt instruments having ‘AA-’ and above rating.

Currently, the fund’s portfolio comprises good quality banking sector TFCs (~64%), while the remaining portfolio predominately consists of T-Bills (~30%) and placement with very strong DFI/Banks.

Although, unit holding pattern is fairly concentrated with top 10 investors holding more than 75% of fund’s units. Going forward, the fund will maintain minimum specified exposure towards the financial sector. The remaining assets will be invested in highly liquid short-term GoP securities.

The key risk factors affecting the stability of returns emanate from volatility in prices of TFCs; however, the fund invests in TFCs issued by banks, most of which are liquid. Meanwhile, any major deviations from existing investment policy will be critical for fund’s rating.

For more information, contact:
Hammad Rashid
Analyst
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
Email: hammad.rashid@pacra.com
Web: www.pacra.com