Pakistan Credit Rating Agency Limited maintains stability rating of NIT Income Fund

Lahore, March 13, 2014 (PPI-OT): The Pakistan Credit Rating Agency (PACRA) has maintained the stability rating of NIT Income Fund (NIT-IF), an open-end 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 possesses a low exposure to risks.

The fund’s investment mandate is to generate competitive stream of returns with moderate level of risk for its unit holders, by investing primarily in portfolio of fixed income securities with weighted average time to maturity not exceeding four years.

The rating reflects the fund’s strong credit quality and sound liquidity profile emanating from sizeable investment in government securities. The portfolio of the fund at end-Dec13 is primarily invested in government securities (T-bills:75%, PIBs:1%).

The remaining net assets of the fund are allocated in good quality corporate debt instruments (TFCs: 11%) and cash balances placed with high quality scheduled banks. The rating incorporates the fund’s relatively modest exposure to interest rate volatility with the fund’s duration not exceeding 120 days over the last 4 quarters. However, the unit holding pattern is fairly concentrated, with the top10 investors representing 62% of the fund’s assets.

Going forward, the fund intends to keep 74% of the fund’s net assets invested in government securities along with 10% allocation in TFCs. The remaining assets of the fund will be placed with banks having high credit quality.

The main risk affecting the stability of returns emanates from volatility in prices of TFCs which may occur due to socio-economic risk prevailing in the country. 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.

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

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