Pakistan Credit Rating Agency Limited maintains stability rating of NAFA Financial Sector Income Fund

Lahore, January 01, 2016 (PPI-OT): The Pakistan Credit Rating Agency Limited (PACRA) has maintained the stability rating of NAFA Financial Sector Income Fund (NFSIF) an open-end income fund, at ‘A+'(f) (Single A Plus ; fund rating). The fund’s rating denotes a strong capacity to manage relative stability in returns and low exposure to risks.

The fund’s investment mandate is to provide enhanced income while 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. At end-Sep15, the portfolio of the fund was primarily invested in debt securities (TFCs: 32% – AA- or above) while the remaining assets were kept as daily cash balances in form of placements and deposits (66% – A+ or above). The unit holding pattern of the fund is moderately concentrated with top10 investors representing ~43% of the fund’s assets.

Going forward, the fund plans to keep its allocation to debt instruments (50%) of the financial sector, while the remaining assets will be invested in bank placements (35%) and government securities (15%). Material changes in the fund’s asset allocation strategy, which could negatively impact the fund’s credit quality and exposure to interest rate risk, remain critical 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