Pakistan Credit Rating Agency maintains stability rating of Pakistan Income Enhancement Fund

Lahore, January 09, 2013 (PPI-OT): The Pakistan Credit Rating Agency (PACRA) has maintained the stability rating of Pakistan Income Enhancement Fund (PIEF), an open-end aggressive 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 investment policy of the fund is to earn high regular income for its unit holders by pursuing an aggressive investment strategy in the debt and fixed income market.

The rating reflects improvement in the credit quality and liquidity profile of the fund owing to sizeable investments in government securities. At end Sep-12, the fund is primarily invested in government securities (PIBs: 20%, T-bills: 20%, GOP Ijara Sukuks:10%) while maintaining 13% of the net assets in cash with scheduled banks.

The remaining portion of the fund is invested in TFCs (36%) and Sukuks (1%). The credit quality of the fund has improved with non-performing assets comprising 2% of net assets at end Sep-12. The unit holding pattern of the fund is adequately diversified with top10 investors accounting for 33% of fund’s units.

Going forward, the fund plans to invest 60% of its total assets in risk-free securities. The remaining assets will largely comprise TFCs (25%), term deposits (10%) and cash balances (5%). The main risk factors affecting the stability of returns emanates from any further deterioration in the credit quality of asset profile and 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