Pakistan Credit Rating Agency Maintains Stability Rating of IGI Islamic Income Fund

Lahore, June 28, 2012 (PPI-OT): The Pakistan Credit Rating Agency (PACRA) has maintained the stability rating of IGI Islamic Income Fund, an open-end Shariah compliant income fund (IGI-IIF), at “A+ (f)” (Single A Plus ; fund rating). The fund’s rating denotes a strong capacity to manage relative stability in returns and low exposure to risks.

The primary investment objective of the fund is to provide investors with high and stable rate of return consistent with long-term capital appreciation by investing in a diversified portfolio of Shariah compliant investment instruments, TDRs and cash balances.

The rating reflects strong credit quality of the fund’s assets and a good liquidity profile. Currently, a significant portion of fund’s assets comprises GoP Ijara Sukuk (~50%). The remaining portfolio is dominated by daily cash balances (~35%) with Islamic banks and short-term corporate instruments (~20%) having ‘AA’ and above rating at end-Mar12. At the same time, the rating incorporates fund’s low exposure to interest rate volatility emanating from a portfolio duration of 81 days. The unit holding pattern is fairly concentrated and remains vulnerable to redemption pressure. However, comfort can be drawn from significant holding of the group and its associates.

Going forward, the fund intends to invest in Government issued Ijarah Sukuks (50%), as well as, good quality corporate Sukuks (25%), with a portfolio duration of less than 180 days. To ensure sound liquidity, the remaining assets would be maintained as cash balances and TDRs amongst institutions with good ratings.

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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