Press Release

JCR-VIS reaffirms Fund Stability Rating of Meezan Sovereign Fund at AA(f)

Karachi, October 28, 2014: JCR-VIS Credit Rating Company Limited (JCR-VIS) has reaffirmed the Fund Stability Rating of Meezan Sovereign Fund (MSF) at ‘AA(f)’ (Double A(f)). The previous rating action was announced on August 29, 2013.

Asset allocation guidelines limit the fund’s exposure to credit and market risk. As a sovereign fund, MSF is required to maintain at least 70% of net assets in Shari’ah compliant profit bearing Government backed/ issued securities. Credit risk profile of the fund has been maintained in line with policy guidelines. Average investment in GoP Ijarah Sukuk represented around 68% of net assets during FY14. The remaining assets were deployed in cash and bank balances with at least ‘AA’ rated banks. While there is no limit on duration, all Shari’ah compliant instruments available in the market carry returns pegged with market benchmark rates and are re-priced periodically. Accordingly, while the fund may be invested in long term instruments, its sensitivity to changes in market benchmark rates is expected to remain manageable. There has however been volatility in returns, on account of volatility in prices of GoP Ijarah Sukuk, which in turn stemmed from demand-supply factors. This volatility may persist over the foreseeable horizon unless a steady flow of fresh auctions is witnessed. Concentration in investor profile has increased over the year; however, given the liquid nature of assets, the fund is likely to be able 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 35311861-70 or fax to 35311872-3.


Jamal Abbas Zaidi
Deputy CEO

Applicable rating criteria: Fund Stability Ratings (February 2012)

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