Pakistan Credit Rating Agency upgrades Stability Rating of NAFA Riba Free Savings Fund


Lahore: The Pakistan Credit Rating Agency (PACRA) has upgraded stability rating of NAFA Riba Free Savings Fund (NRFSF), an open-end Islamic income fund to ‘AA- (f)’ (Double A Minus – fund rating)[Previous rating: "A+(f)"]. 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 preservation of capital and earn a reasonable rate of return along with a higher degree of liquidity by investing in short-term products of Shariah compliant banks, money market instruments and Government securities. The rating reflects strong credit quality of the Fund’s assets and strong liquidity profile. At the same time, the rating incorporates fund’s moderate exposure to interest rate volatility. Currently, a significant portion of Fund’s assets comprises of GoP Ijara Sukuks (~71% at end- May11); the remaining portfolio is dominated by cash balances with Islamic banks carrying a minimum credit rating of ‘A’ and above. The unit holding pattern is fairly concentrated. The total fund size has increased to over PKR 360 mln at end-May11.

Going forward, more than 50% of the portfolio will remain invested in GoP Ijara Sukuks and the remaining assets will be in the form of TDRs and cash balances with high rated Islamic banks. The main factor affecting the stability of fund could be significant change in proposed asset mix towards low rated avenues increasing the credit and liquidity risks.

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