Pakistan Credit Rating Agency Limited maintains stability rating of NIT Government Bond Fund

Lahore, March 13, 2014 (PPI-OT): The Pakistan Credit Rating Agency (PACRA) has maintained the stability rating of NIT Government Bond Fund (NIT-GBF), an open-end income fund, at ‘AA (f)’ (Double A ; 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 with minimal risk by primarily investing in bonds and short-term debt securities issued by Government of Pakistan (GoP). The rating reflects the fund’s very strong credit quality and sound liquidity profile emanating from the fund’s policy to invest 70% investments in a mix of short-term and long-term government securities.

At end-Dec13, government securities comprised 99% of the fund’s assets. The government securities portfolio predominantly comprised T-Bills (91%) followed by PIBs (8%). The remaining assets of the fund were placed with commercial banks rated ‘A-’ and above.

At the same time, the rating incorporates the fund’s modest interest rate profile, owing to portfolio duration of 92 days at end-Dec13. However, the unit holding pattern of the fund is fairly concentrated, with the top10 investors representing 69% of the fund’s assets which makes the fund vulnerable to redemption pressure.

The rating is dependent on maintaining portfolio mix of above 70% investments in government securities with portfolio duration not exceeding 180 days. The remaining portfolio must be placed with high rated banks.

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