Pakistan Credit Rating Agency upgrades Stability Rating of IGI Aggressive Income Fund

Lahore, January 23, 2013 (PPI-OT): The Pakistan Credit Rating Agency (PACRA) has upgraded the stability rating of IGI Aggressive Income Fund (IGI-AIF), an open-end aggressive income fund, to ‘A- (f)’ (Single A Minus ; fund rating) [Previous Rating: BBB+ (f)]. The fund’s rating denotes a strong capacity to manage relative stability in returns and low exposure to risks.

The investment mandate of the fund is to provide competitive returns to its unit holders while ensuring capital preservation, by primarily investing in fixed income securities.

The rating reflects the fund’s improved credit quality and enhanced liquidity profile emanating from relatively lower allocation of the fund’s assets to TFCs. At end Sep-12, the fund’s assets are primarily invested in government securities (55%).

The remaining assets comprise investments in good quality corporate debt instruments (TFCs: 16%, Sukuks: 13%) and cash placements with banks and DFIs. However, non-performing assets of the fund account for around 12% of the fund’s assets. Moreover, the unit holding pattern of the fund is highly concentrated with top10 investors representing almost the entire net assets of the fund which makes the fund vulnerable to redemption pressure.

Going forward, the management intends to increase the allocation of the fund to good quality corporate debt instruments (55%), while the remaining assets will comprise government securities (30%) and cash balances. The main risk factor affecting the stability of returns emanates from the volatility in prices of TFCs amidst largely illiquid market for this segment.

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

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