Press Release

JCR-VIS Reaffirms Fund Stability Rating of HBL Income Fund at A(f)

Karachi, October 28, 2013: JCR-VIS Credit Rating Company Ltd. (JCR-VIS) has reaffirmed the Fund Stability Rating of HBL Income Fund (HBLIF) at ‘A(f)’ (Single A(f)).

During FY13, almost half of the fund’s assets remained deployed in government paper while exposure in corporate debt instruments was reduced further on a timeline basis. Fresh exposure in TFCs during FY13 mainly pertains to instrument issued by commercial bank carrying strong credit risk profile.

With most instruments in the portfolio being either short term or carrying returns pegged to market benchmark rates, interest rate risk exposure of the fund is manageable, as also reflected by duration of 168 days at end-FY13. TFCs continue to be exposed to liquidity risk resulting in price risk, given low trading volumes in the secondary debt market. During FY13, return of HBLIF was recorded lower than the benchmark i.e. 6M KIBOR. This was on account of provisioning taken against non-performing investments. Exposure in non performing investments, net of provisions, comprises around 1% of total assets of the fund at end-1QFY14. Future downside risk arising from the existing credit exposures of the fund is considered manageable.

While net assets of the fund largely remained unchanged during FY13, attrition was witnessed during 1QFY14. Investor profile of the fund features significant concentration; the parent bank remains the largest investor in the fund.

For further information on this rating announcement, please contact the undersigned (Ext: 501) or Ms. Sobia Maqbool, CFA (Ext: 604) at 35311861-70 (10 lines) or fax to 35311872-3.



Javed Callea
Advisor

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