November 30, 2018 (MLN): Pakistan Credit Rating Agency (PACRA) has maintained the stability rating of Dawood Income Fund at ‘AA-(f)’ for long term, with a ‘stable outlook forecast.
According to an official press release issued by PACRA, the rating reflects good credit quality and liquidity profile of the fund emanating from approximately 44% of its investments as cash placements with banks having minimum A+ rating and 29% with government securities having rating of 'AAA' (29%) at end Jun-18.
Around 9% of net assets of the fund are invested with investment avenues having AA rating and ~ 39% with AA-
“The objective of the fund is to deliver returns primarily from debt and fixed income investments without taking excessive risk,” says the agency in its note.
The rating is contingent upon the fund's interest rate sensitivity and volatility in prices of TFCs/Sukuks in case of exposure to low rated instruments.
“Material changes in the fund's asset allocation strategy, which could negatively impact the fund's credit quality and exposure to interest rate risk, remains critical for the rating,” cautions PACRA.
