Pakistan Credit Rating Agency upgrades Stability Rating of Pak Oman Advantage Islamic Income Fund

Lahore, July 10, 2012 (PPI-OT): The Pakistan Credit Rating Agency (PACRA) has upgraded the stability rating of Pak Oman Advantage Islamic Income Fund (POAIIF) to “AA-(f)” (Double A Minus ; fund rating) [Previous Rating:- “A+(f)”], an open-end Shariah compliant income fund. The fund’s rating denotes very strong capacity to manage relative stability in returns and very low exposure to risks.

The primary investment objective of the fund is to provide investors with high current income and long-term capital growth by investing primarily in a diversified portfolio of Shariah compliant investment instruments.

The rating reflects strong credit quality of the fund’s assets and a strong liquidity profile emanating from investments of more than ~70% in GoP Ijara Sukuk at end-Mar12. The remaining portion is placed with Islamic Banks as cash balance. At the same time, rating incorporates fund’s low exposure to interest rate volatility, on account of a portfolio duration of less than 90 days. The unit holding pattern is fairly concentrated; however, comfort can be drawn from significant holding of the sponsors in the fund.

The rating is dependent upon enhancing AIIF’s exposure towards GoP bonds to 75% of the net assets, while not exceeding a portfolio duration of 180 days. The remaining funds will be placed with high credit quality Islamic Banks and DFIs. The main risk factors emanate from the relatively high concentration in individual instruments, and vulnerability to redemption given the small size of the fund.

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