Press Release

JCR-VIS Reaffirms Fund Stability Rating of PICIC Income Fund

Karachi, February 25, 2015: JCR-VIS Credit Rating Company Limited (JCR-VIS) has reaffirmed the Fund Stability Rating (FSR) of PICIC Income Fund (PIF) at ‘A+(f)’ (Single A Plus(f)). The previous rating action was announced on December 23, 2013.

Asset allocation has so far remained conservative vis-à-vis the allowed policy limits, with just under two-thirds of assets remaining deployed in government paper during FY14 and another one-fifth in cash and bank placements. All credit exposures are subject to minimum rating of ‘A+’. The maximum limit for exposure in margin trading system is proposed to be revised downwards from 40% to 15%; actual investment in this avenue has remained below 15%during FY14.

The IPS allows the fund to extend duration up to two years (preferably 365 days). The same stood at 484 days at end-December, 2014. The duration increased on account of larger holding of PIBs, given the management’s expectations regarding downward movement in policy rate. Accordingly, the fund’s exposure to interest rate risk has trended upwards.

Investor concentration has improved on a timeline basis, though it is still considered to be on the higher side. Performance of the fund is benchmarked against average 6 months KIBOR. In addition to depicting a decline in line with the general trend in interest rates in the market, return of the fund has remained lower than the benchmark over the last three years as assets held by the fund do not carry return pegged to KIBOR.

For further information on this rating announcement, please contact Ms. Sobia Maqbool, CFA (Ext: 604) or the undersigned at 35311861-70 or fax to 35311872-3.

JavedCallea
Advisor

Applicable rating criteria: Fund Stability Ratings (February 2012)

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 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 February 25, 2015 VIS Credit Rating Company Limited. All rights reserved. Contents may be used by news media with credit to VIS.