Lahore, August 20, 2021 (PPI-OT):The rating reflects Pak Oman Government Securities Fund’s (or the “Fund”) credit quality and liquidity profile emanating from the fund’s policy to generate competitive return through investing primarily in government securities. At end Jun’20, ~21% of the fund’s exposure was in Term Finance Certificates (TFCs) having rating ‘A+’ and above and ~78.5% invested in T-Bills. The unit holding pattern of the fund is highly concentrated with top ten investors representing 100% of the fund’s assets, of which ~99% are own investments.

The current investment strategy is in line with the investments policy, while the policy allows the Fund to invest its up to 100% in government backed securities. During 2HFY21, the Fund underperformed its benchmark and industry average. The Fund’s duration has significantly decreased to 41 days (Dec’20: 212 days), this is due to the Fund’s strategy to invest in shorter term T-Bills which were previously invested in longer term PIBs. This may reduce the interest rate and market risk.

Going forward, the rating remains dependent on maintaining at least 70% allocation towards government securities with portfolio duration not exceeding 2 years. Material changes in the fund’s asset allocation strategy, impacting its credit quality and/or exposure to interest rate risk, would affect 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: +92-42-5869504-6
Fax: +92-42-5830425
Email: hammad.rashid@pacra.com
Website: www.pacra.com