Pakistan Credit Rating Agency Limited upgrades stability rating of MCB Pakistan Sovereign Fund

Lahore, September 28, 2016 (PPI-OT): The Pakistan Credit Rating Agency (PACRA) has upgraded the stability rating of MCB Pakistan Sovereign Fund (MCBPSF), an open-ended income fund, to ‘AA-(f)’ (Double A minus; fund rating) [previous rating ‘A+(f)’ (Single A plus; fund rating). The fund’s rating denotes a very strong capacity to manage relative stability in returns and very low exposure to risks. The fund’s mandate is to generate reasonable return by primarily investing in bonds and short-term debt securities issued by Government of Pakistan (GoP).

The rating reflects the fund’s strong credit quality and a sound liquidity profile emanating from the fund’s policy to invest 70% of asset in a mix of short-term and long-term government securities on a weighted average basis with duration not more than 2 years. At end July-16, fund’s exposure in T-Bills was 33% while 52% of the net assets were invested in PIBs. Exposure in ‘AAA’ rated banks was 3.6% whereas in ‘AA’ rated banks, exposure was 1.5%.

The fund has been consistently meeting parameters of low interest rate risk (duration) for a number of months. The unit holding pattern of the fund is moderately concentrated, with top10 investors representing 52% of the fund’s assets. Going forward, the rating remains dependent on maintaining at least 70% allocation towards government securities with portfolio duration not exceeding 2 years. PACRA would monitor compliance against agreed parameters on monthly average basis.

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