Pakistan Credit Rating Agency revises stability Rating of Askari High Yield Scheme

Lahore, January 30, 2013 (PPI-OT): The Pakistan Credit Rating Agency (PACRA) has revised the stability rating of Askari High Yield Scheme (AHYS), an open-end aggressive income fund, to ‘A (f)’ (Single A ; fund rating) [Previous rating: ‘A+ (f)’]. The fund’s rating denotes a strong capacity to manage relative stability in returns and low exposure to risks.

The investment objective of the fund is to earn a stable stream of income with a high level of risk by primarily investing in fixed income securities and offering prospects of income and capital growth.

The rating incorporates the fund’s strong credit quality and good liquidity profile emanating from sufficient allocation to government securities and relatively higher provisioning against the fund’s non-performing portfolio. At end Nov-12, the portfolio is primarily invested in government securities (T-bils:31%, PIBs:17%), while maintaining cash balances (7%) with good credit quality banks.

The remaining portion of the fund’s portfolio comprises corporate debt instruments ~35%. Although sizeable provisioning has been made during the year, non-performing assets still account for 8% of the fund’s net assets at end Nov-12. The unit holding pattern of the fund is highly concentrated with top10 investors representing almost the entire fund.

However, comfort can be drawn form the sizeable investment by sponsors. Going forward, the management of the fund intends to maintain the fund’s allocation towards government securities (40%). The remaining assets will be invested in a mix of good quality corporate debt instruments (TFCs:35%).

The fund’s credit profile might improve on account of recovery in the underlying low quality investments. The main risk factors affecting the stability of returns emanate from volatility in prices of TFCs and Sukuks amidst largely illiquid market for this segment. The management intends to maintain a duration of around 2 years which increases the sensitivity of government securities to changes in interest rates.

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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