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The Pakistan Credit Rating Agency Limited

Date
12-Jul-2017
Analysts
Rai Umar Zafar
rai.umar@pacra.com

Mohsin Naseer
mohsin.naseer@pacra.com

+92-42-35869504
www.pacra.com
Applicable Criteria

  • Methodology | Fund Stability Rating (Jun 17)

Related Research

  • Sector Study | Mutual Funds (Oct 16)
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PACRA Maintains Stability Rating of First Habib Income Fund
 Rating Type Stability Rating
Current
(12-Jul-2017)
Previous
(09-Dec-2016)
 Action Maintain Maintain
 Long Term AA-(f) AA-(f)
 Short Term - -
 Outlook Stable Stable
 Rating Watch - -

The investment mandate of the fund is to provide reasonable rate of return to its unit holders while ensuring capital preservation by investing in a diversified portfolio of T-Bills, spread transactions, MTS, deposits with scheduled banks, and money market placements.

The fund has largely remained invested in Bank placements. At end-May’17, majority of the fund's assets were invested as cash (48.05%) and TDRs (8.41%). This exposure is with banks rated 'AA+' (7.88%) and 'A+' (48.5%). The remaining assets of the fund were invested as spread transactions (i.e. 33.98%). The fund has high concentrated unit holding pattern, with top10 investors representing 59% of the fund size at end-May’17.

Going forward, the management intends to increase funds allocation towards spread transaction and MTS, while the remaining assets would be invested in good quality corporate debt instruments and cash and term placements. Material changes in the fund's asset allocation strategy, which could negatively impact the fund's credit quality and exposure to interest rate risk, remain critical for the rating
About the Entity
HAML, incorporated in September 2005, is licensed to carry out asset management services under the Non-Banking Finance Companies Regulations. Habib family and associates - a distinguished name in Pakistan - own around 90% of shareholding in the company, wherein Bank AL Habib Limited (BAHL) being the single largest shareholder holds 30%. The bank has an asset base of PKR 751bln at end-Dec16. HAML is currently managing five open-end funds with an AUM of PKR 2.8bln end May-17.

HAML's BoD consists of seven members, including the CEO. The Chairman of BAHL - Mr. Ali Raza D. Habib, a senior distinguished entrepreneur, also chairs the BoD of the AMC. Mr. Imran Azim, the CEO of HAML, is an MBA and has profound experience in Pakistan's mutual fund industry.
The primary function of PACRA is to evaluate the capacity and willingness of an entity to honor its obligations. Our ratings reflect an independent, professional and impartial assessment of the risks associated with a particular instrument or an entity. PACRA's comprehensive offerings include instrument and entity credit ratings, insurer financial strength ratings, fund ratings, asset manager ratings and real estate gradings. PACRA opinion is not a recommendation to purchase, sell or hold a security, in as much as it does not comment on the security's market price or suitability for a particular investor.