OREANDA-NEWS. Fitch Ratings has assigned Al Istitmar Chaabi Tresorerie fund a 'AAAmmf(mar)' National Money Market Fund Rating. The fund is domiciled in Morocco and managed by Upline Capital Management (UCM).

KEY RATING DRIVERS
The main drivers of the rating are:
-- The portfolio's overall credit quality
-- Short portfolio maturity with minimal exposure to interest rate and spread risks
-- High portfolio liquidity, with moderate investor concentration
-- The capabilities and resources of UCM as investment manager

The 'AAAmmf(mar)' rating is the highest that can be assigned to a money market fund in Morocco and indicates an extremely strong capacity to preserve principal and provide shareholder liquidity through limiting credit, market and liquidity risk, relative to all other short-term investments in Morocco.

PORTFOLIO CREDIT QUALITY/DIVERSIFICATION
In line with Fitch's 'National Scale Money Market Fund Rating Criteria', the fund seeks to maintain a high credit quality by investing exclusively in securities issued by the Kingdom of Morocco (BBB-/Stable) or high-quality and publicly-rated issuers or counterparties, and in repurchase agreements collateralised by government bonds, with a sound legal framework.

The fund may use overnight, or weekly callable overnight, inter-fund repo with other funds managed by UCM. Such inter-fund transactions are collateralised by Moroccan government bonds with an appropriate level of overcollateralisation should the collateral's residual maturity exceed that of instruments eligible for direct investment. At end-May 2015, inter-fund repos represented 14% of the fund's assets.

The fund controls concentration risk by setting adequate limits on its exposures to individual issuers (10%) and repo counterparties (20%) as per regulation.

MATURITY PROFILES
The fund's maturity profile is maintained in line with Fitch's 'AAAmmf' national scale money market fund rating criteria. The fund also limits the maturity date of any single investment to 397 days other than sovereign or quasi-sovereign floating-rate notes, which may have maturities of up to 24 months. At end-May 2015, the fund's weighted average maturity and weighted average life stood at 71 days.

LIQUIDITY PROFILES
The fund's investment restrictions are aimed at maintaining strong levels of daily and weekly liquidity to meet investors' redemption requests, in line with Fitch's rating criteria for 'AAAmmf(mar)' funds. At end-May 2015, 69.1% of the fund's AUM were in daily liquid assets (overnight or eligible assets), while the fund's client base concentration was rather moderate.

FUND OBJECTIVES
The objective of the fund is to provide capital stability, liquidity and income through investment in a portfolio of high credit quality money market instruments and short-term bonds.

INVESTMENT MANAGERS
Incorporated in 1999, UCM is a subsidiary of Upline Group, itself owned by Groupe Banque Populaire, the largest bank in term of deposits. At end-May 2015, UCM was the fourth-largest Moroccan asset manager with MAD27.9bn assets under management (around EUR2.6bn). Its assets are concentrated on fixed income (95%), including 18% in money market products, in line with the overall local market, with the remainder being equity and balanced portfolios.

Fitch views UCM's investment management capabilities, operational controls, financial and resource commitments and compliance procedures as consistent with a 'AAAmmf(mar)' National Money Market Fund rating. Fitch criteria limits are hard-coded in the central front-to back system with blocking controls.

RATING SENSITIVITIES
The rating may be sensitive to material changes in the credit quality or market risk profile of the fund. A material adverse deviation from Fitch guidelines for any key rating driver could cause Fitch to downgrade the rating.

A downgrade of the sovereign's international Long-Term Issuer Default Rating may not necessarily result in a downgrade of the fund's National Money Market Fund Rating as it could continue to represent the lowest credit, market and liquidity risk available in Morocco, in line with Fitch's national scale rating approach.

SURVEILLANCE
To maintain the fund's rating, Fitch will seek weekly fund and portfolio holdings information sent through the fund's custodian, Banque Centrale Populaire, and will conduct surveillance checks against its ratings guidelines.