Lahore, September 13, 2021 (PPI-OT): NIT Income Fund (or the ‘Fund’) is a medium-risk profile fund. The assigned rating reflects its competitive stream of returns with a moderate level of risk. As per the investment policy, the Fund shall keep at least 25% of assets in cash or near cash instruments, which enhances the liquidity profile. The weighted average to maturity of net assets is capped at 4 years with an exception to securities issued by GOP. The rating reflects the moderate strength of the Fund’s credit and interest rate risk profile.
At the end Jun’21, ~32% of the Fund’s assets were invested in a single bank rated AA+, this would create concentration risk. Whereas, ~11% of funds were invested in A- or above rated TFCs of the financial institutions. The fund also had an exposure of ~13% of gross assets in comparatively risky avenues such as corporate sukuk. The duration of the Fund stood at ~59 days which provides it the flexibility to deal with interest rate risk. The unit holding pattern of the Fund is highly concentrated with the top ten investors representing ~85% of the fund’s assets, out of which ~62% are owned investments which provide a cushion against the redemption pressure.
Going forward, based on market expectations the Fund may shift its assets towards floating rate and short tenor instruments as the SBP is expected to smoothly increase the policy rate. Material changes in the Fund’s asset allocation strategy, impacting its 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