Press Release

JCR-VIS Reaffirms Fund Stability Rating of Meezan Islamic Income Fund

Karachi, October 29, 2014: JCR-VIS Credit Rating Company Ltd. (JCR-VIS) has reaffirmed the Fund Stability Rating (FSR) of Meezan Islamic Income Fund (MIIF) at ‘A-(f)’ (Single A Minus(f)). The previous rating action was announced on August 15, 2013.

Net assets of the fund depicted considerable increase in FY14 on the back of additional investment by related parties. Risk profile of the fund has become conservative on a timeline basis as proceeds realized from maturing investment in corporate Sukuk were re-deployed in GoP Ijarah Sukuk and deposits with banks having a minimum rating in the ‘A’ band. Non-performing exposures have been fully provided over time. Given the asset composition, credit risk emanating from the portfolio is manageable. As an Islamic income fund, MIIF’s exposure to price risk originating from changes in benchmark rate is expected to remain manageable.

While performance of the fund has remained stable during past one year, there was a positive spike in returns towards year end on account of reversal against a non-performing instrument. Given that the fund holds other assets which have been fully provided, any recoveries against the same may also have a positive impact on returns. However, the positive impact will be diluted and returns are likely to become more aligned with market benchmark rates as the fund size continues to grow, assuming no additional deterioration is witnessed in risk profile.

In line with increase in related party investments, investor concentration in the fund has trended upward. Nevertheless, improving liquidity profile of the fund’s assets is expected to enable the fund to meet redemptions in a timely manner.

For further information on this rating announcement, please contact Mr. Javed Callea (Ext: 501) or Ms. Sobia Maqbool, CFA (Ext: 604) at 021-35311861-70 or fax to 021-35311872-3.



Jamal Abbas Zaidi
Deputy CEO

Applicable rating criteria: Fund Stability Ratings (February 2012)

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