ECONOMYNEXT – Senfin Cash Market Fund’s Nationwide Fund Credit score High quality Score has been upgraded to ‘AAf(lka)’, from ‘BBBf(lka)’, by Fitch Scores, and its Nationwide Fund Market Threat Sensitivity Score to ‘S1(lka)’ from ‘S2(lka)’.
The fund primarily invests in Sri Lankan authorities securities, repurchase agreements backed by Sri Lankan authorities securities and time deposits at monetary establishments.
“The Nationwide Fund Credit score High quality Score takes into consideration the fund’s precise and potential credit score high quality,” Fitch mentioned.
“The Nationwide Fund Market Threat Sensitivity Score displays the fund’s low sensitivity to interest-rate and unfold threat.”
The complete assertion is reproduced under:
Fitch Upgrades Senfin Cash Market Fund to ‘AAf(lka)’/’S1(lka)’
Fitch Scores – Shanghai/London – 05 Mar 2025: Fitch Scores has upgraded Senfin Cash Market Fund’s Nationwide Fund Credit score High quality Score to ‘AAf(lka)’, from ‘BBBf(lka)’, and its Nationwide Fund Market Threat Sensitivity Score to ‘S1(lka)’ from ‘S2(lka)’.
KEY RATING DRIVERS
The improve was pushed by the latest recalibration of the Sri Lanka sovereign score (CCC+) and the improve of Sri Lankan banks and non-bank monetary establishments (NBFIs); see Fitch Upgrades Sri Lanka to ‘CCC+’, dated 20 December 2024, Fitch Upgrades 10 Sri Lankan Banks’ Nationwide Scores and Affirms 5 after Scale Recalibration, dated 21 January 2025, and Fitch Upgrades 10 Sri Lankan NBFIs’ Scores, Affirms 8 Following Nationwide Scale Recalibration, dated 24 January 2025.
The fund primarily invests in Sri Lankan authorities securities, repurchase agreements backed by Sri Lankan authorities securities and time deposits at monetary establishments. The upgrades of the Sri Lanka sovereign, banks and NBFIs have had a constructive affect on the fund’s Nationwide Fund Credit score High quality Score and Nationwide Fund Market Threat Sensitivity Score.
NATIONAL CREDIT QUALITY
The Nationwide Fund Credit score High quality Score takes into consideration the fund’s precise and potential credit score high quality. The weighted-average score issue (WARF), Fitch’s proprietary measure of fund credit score threat, was 0.36 as of end-January 2025, throughout the ‘AAf(lka)’ score vary of 0.3-0.9. A fund’s WARF is a perform of the credit score scores of the securities held in its portfolio and the remaining time period to maturity, weighted by market worth.
Fitch bases the WARF on Fitch scores the place out there. Fitch assumes the publicity, which isn’t publicly rated by any globally recognised score companies, is rated ‘CCC(lka)’ for the aim of the WARF calculation. The score and maturity of the collateral is used within the WARF calculation if the counterparties of repurchase settlement transactions are non-investment grade.
LOW SENSITIVITY TO MARKET RISK
The Nationwide Fund Market Threat Sensitivity Score displays the fund’s low sensitivity to interest-rate and unfold threat. Weighted-average maturity and weighted-average life are brief, standing at round 150 days at end-January 2025. Sri Lanka’s cash market fund laws require a most weighted-average maturity of 210 days, which limits funds’ rate of interest and unfold length.
The Market Threat Issue, Fitch’s proprietary measure of fund market threat, was throughout the ‘S1(lka)’ score vary of 0.0-2.0 at end-January 2025.
FUND PROFILE
The fund, launched in 2014, is an open-end cash market fund domiciled in Sri Lanka and controlled by the Securities and Change Fee of Sri Lanka. The fund seeks to offer traders with common short-term returns and liquidity by investing in a portfolio of diversified short-term fixed-income securities.
The fund’s property are segregated with the trustee, Hatton Nationwide Financial institution PLC (AA-(lka)/Secure). Belongings underneath administration reached LKR5.3 billion at end-January 2025.
INVESTMENT MANAGER
Fitch views Senfin Asset Administration (Pvt) Ltd (SenFin) as a suitably certified, competent and succesful funding supervisor. SenFin was based in 2010 and is a completely owned subsidiary of Senkadagala Finance PLC (BBB(lka)/Secure). It had property underneath administration of LKR12.8 billion as of end-2024, accounting for two% of Sri Lanka’s mutual fund market. SenFin manages six fairness funds, one bond fund and two cash market funds. It additionally supplies non-public portfolio administration companies.
RATING SENSITIVITIES
Components that May, Individually or Collectively, Result in Adverse Score Motion/Downgrade
The Nationwide Fund Credit score High quality Score could possibly be downgraded if the portfolio suffers damaging score migration. This might happen following an elevated publicity to property that aren’t publicly rated by any globally recognised score company or if it expands its funding pointers to permit it to spend money on decrease high quality securities.
The Nationwide Fund Market Threat Sensitivity Score could possibly be downgraded if the funding pointers are modified to permit the fund to imagine elevated length threat or if the fund will increase its publicity to repurchase agreements with non-investment grade counterparties backed by longer-dated collateral.
Components that May, Individually or Collectively, Result in Constructive Score Motion/Improve
The Nationwide Fund Credit score High quality Score could possibly be upgraded if the credit score high quality of the underlying property additional improves.
The Nationwide Fund Market Threat Sensitivity Score can’t be upgraded, as it’s already on the highest score stage. (Colombo/Mar8/2025)
