Pakistan Credit Rating Agency Maintains stability Rating of First Habib Income Fund


Lahore: The Pakistan Credit Rating Agency (PACRA) has maintained the stability rating of First Habib Income Fund (FHIF) at ‘AA- (f)’ (Double A minus – fund rating), an open-end income fund. The fund’s rating denotes a very strong capacity to manage relative stability in returns and very low exposure to risks.

The objective of the fund is to provide reasonable rate of return along with concern for safety of principal amount by investing in a diversified portfolio of T-Bills, term finance certificates (TFCs), deposits with scheduled banks and money market placements. The rating incorporates very strong credit quality of the fund’s assets and a sound liquidity profile, emanating from the current asset mix, in which more than 80% the assets are invested in short term government securities.

The remainder of the fund is invested in TFCs, TDRs and deposits with banks mainly rated ‘AA’ or higher. At the same time, the rating incorporates fund’s moderate exposure to interest rate volatility, attributed to duration of 59 days at end-Mar11. A high concentration in unit holding pattern keeps the fund vulnerable to redemption pressure. However, this is mitigated to a large extent by group companies having significant investments.

Although the fund by policy can allocate assets in any minimum investment grade avenue, it plans to maintain majority of its exposure in government securities followed by high credit quality debt instruments. Any change in the fund’s credit quality impacting its asset-mix and/or liquidity, though permitted under investment policy, would have implications for the 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