Lahore, November 18, 2020 (PPI-OT): The assigned rating reflects the fund’s strong credit and interest rate risk profile emanating from its investment strategy to invest in adequate credit quality (at least ‘AA’ and above) and shorter duration investment avenues having sound liquidity. At end Sep’20, the fund had placed ~99.8% of its assets with a commercial Islamic bank rated ‘AA’. As per the investment policy guidelines, the fund shall place minimum 10% of assets in Cash and Cash equivalents: Shariah compliant Government Securities within 90 days maturity and cash with Islamic banks/Windows of Islamic Banks.
This is expected to allow the fund to maintain a strong liquidity profile. The weighted average time to maturity of the fund shall not exceed 90 days and the maturity of any single asset shall not exceed 6 months, it limits the funds exposure to interest rate risk. Benchmark return of fund will be the 3-month average deposit rate of 3 ‘AA’ rated Islamic banks/Islamic windows of conventional banks.
Going forward, the fund will invest in accordance with its authorized investment policy, however the allocations will be diversified appropriately to reduce the concentration risk. Material changes in the fund’s asset allocation strategy, impacting it’s credit quality and/or exposure to interest rate risk, would affect the rating.
For more information, contact:
Analyst,
The Pakistan Credit Rating Agency Limited (PACRA)
Awami Complex, FB1, Usman Block New Garden Town,
Lahore, Pakistan
Tel: +92-42-5869504-6
Fax: +92-42-5830425
Email: hammad.rashid@pacra.com
Website: www.pacra.com
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