PACRA Upgrades Stability Rating of First Habib Income Fund

Lahore, March 05, 2021 (PPI-OT): The rating of First Habib Income Fund (or the “Fund”) reflects the funds medium risk profile and also captures the objective of the Fund to provide reasonable rate of return consistent with reasonable concern for safety of principal amount to the Unit Holders. During 6MCY20, the asset allocation of the fund ~75% remained in AAA rated banks/Govt. Securities, which reduced the credit risk exposure of the fund.

However, there has been concentration in single bank deposit which would be diversified, going forward. The investment policy of the Fund strictly prohibits the investment in below A rated avenues. The fund has high concentrated unit holding pattern, with top 10 investors representing ~87% of the fund size at end Dec’20. The WAM of the fund increased to ~553 days at Dec’20 (Jun’20: ~438 days) and the duration of the investments is 40 days at Dec’20 which also bodes well for the rating.

Going forward, the management intends to shift funds allocation towards PIBs and T-Bills and in ‘AA’ and above rated Banks. Shifting more assets to longer term securities may expose the Fund to interest rate sensitivity. The management further apprised on the diversification of assets allocation in banks to reduce the concentration risk. Theses material changes in the fund’s asset allocation strategy, have positive impact on the fund’s credit quality and would remain important for the rating.

For more information, contact:
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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