Lahore, November 12, 2012 (PPI-OT): The Pakistan Credit Rating Agency (PACRA) has revised the stability rating of NAFA Money Market Fund (NMMF), an open-end money market fund to “AA(f)” (Double A; fund rating) from “AA+(f)”. The fund’s rating denotes a very strong capacity to manage relative stability in returns and very low exposure to risks.
The rating reflects the change in the fund’s investment strategy, primarily relating to the duration of underlying investments. In recent period, the fund’s duration has exceeded previously committed level of maintaining a duration of less than 60 days.
This resulted in a relatively increased exposure towards interest rate risk. Though in a declining interest rate scenario this helps in increasing the fund’s returns. Nevertheless, the fund’s very low credit risk emanates from its investment mix, having exposure of 92% in Government Securities (primarily T-Bills) at end-Sep12. The remaining assets are deposited with banks and DFIs carrying a minimum credit rating of AA. NMMF intends to manage concentration risk by deploying funds in multiple banks.
The fund’s rating is dependent on maintaining a highly liquid low-risk portfolio of government securities and bank balances. A minimum exposure of 25% in Government securities is required, while the deposits have to be with “AA” category banks. Meanwhile, the portfolio duration must not exceed 90 days.
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