Press Release

JCR-VIS reaffirms Fund Stability Rating of Askari Sovereign Yield Enhancer

Karachi, July 5, 2018: JCR-VIS Credit Rating Company Limited (JCR-VIS) has reaffirmed Fund Stability Rating of Askari Sovereign Yield Enhancer (ASYE) at ‘A+(f)’ (Single A Plus (f)). The previous rating action was announced on December 30, 2016.

ASYE is managed by Pak Oman Asset Management Limited (POAML) since 2018; prior to this, ASYE was managed by Askari Investment Limited. Based on the constitutive document of ASYE, the fund is restricted to place a minimum 70% of net assets in government securities and placing a minimum 25% of net assets as cash or cash equivalents to ensure adequate liquidity. Due to movements in the discount rate, average asset allocation of the fund (based on month-end averages) has shifted to T-Bills. The same impacted the weighted average time to maturity (WATM) of the portfolio which was reported at 0.93 years at end-May 2018, which was compliant with its regulatory framework. As such, sensitivity to interest rate movements as signified by duration also reduced at end-11MY18. On month-end average basis, a large portion of funds were parked in government paper while almost 14% of assets were deployed in cash. Based on the IPS and actual asset allocation, the rating will be constrained by any change in credit quality of the fund’s assets. Moreover, keeping duration of the fund aligned with the expected interest rate scenario would be important, going forward.

Moreover, the fund has witnessed a significant downward trend in its size; AUMs declined from Rs. 1.5b at end-June 2016 to Rs. 176.5m at end-May 2018 on account of higher redemptions from corporate clients. The fund must ensure granularity in tandem with future growth prospects.

For further information on this rating announcement, please contact the undersigned (Ext: 201) or Ms. Muniba Khan (Ext: 214) at 021-35311861-70 or fax to 021-35311873.

Javed Callea

Applicable Rating Criteria: Methodology - Fund Stability Ratings (December 2017)

Information herein was obtained from sources believed to be accurate and reliable; however, VIS Credit Rating Company Limited VIS does not guarantee the accuracy, adequacy or completeness of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information.VIS, the analysts involved in the rating process and members of its rating committee do not have any conflict of interest relating to the rating(s)/ranking(s) mentioned in this report.VIS is not an NRSRO and its credit ratings are not NRSRO credit ratings.VIS is paid a fee for most rating assignments. This rating/ranking is an opinion and is not a recommendation to buy or sell any securities. Copyright 2018 VIS Credit Rating Company Limited. All rights reserved. Contents may be used by news media with credit to VIS.

JCR-VIS Credit Rating Company Limited