Lahore: The Pakistan Credit Rating Agency (PACRA) has assigned a stability rating of ‘A+(f)’ (Single A Plus – fund rating) to Askari High Yield Scheme (AHYS) [Previously; Askari Income Fund], an open-end aggressive income fund. 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 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 reflects fund’s good credit quality along with sectoral diversification. Currently, major portion of fund’s assets are placed in TFCs (~55% at end-Dec11) with the remaining amount invested in Government Securities (~17%), and cash balances (~14%) with financial institutions. Most of the TFCs are having ‘A’ or above ratings.
The fund has experienced decline in the credit quality of its TFCs portfolio though its extent remains limited (non-performing instruments: ~10% of net assets at end-Dec11). The recent restructuring developments for certain instruments, coupled with significant provisioning for some large exposures bodes well for the fund. The unit holding pattern is highly concentrated. Nevertheless, the rating draws comfort from sponsor’s significant holding (~60%) whereby the propensity to keep funds with AHYS over a longer horizon is high.
Going forward, the fund plans to largely maintain its TFCs portfolio with good credit quality instruments, while more than 35% of the assets would remain invested in GoP securities preferably treasury bills. The main risk factor affecting the stability of returns may emanate from volatility in prices of TFCs amidst largely illiquid market for this segment. Meanwhile, any major deviations from proposed portfolio mix, significant change in credit quality of the assets, or substantial redemptions will be critical for fund’s rating.
For more information, contact:
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