Lagos Nigeria, 30 September 2020–Global Credit Ratings has accorded a national scale fund rating of A-(NG)(f) Radix Horizon Fund, with the outlook accorded as Stable. The rating is valid until February 2021.
SUMMARY RATING RATIONALE
Global Credit Ratings (“GCR”) has accorded the above credit rating to Radix Horizon Fund (“Radix HF”) based on the following key criteria:
Radix Horizon Fund (“Radix HF” or “the Fund”) is conceptualised as an open-ended unit-trust scheme, targeted at investors seeking medium to long term investment opportunities. The investment mandate permits the fund to invest in fixed income securities, government securities, fixed deposits, and other high-quality money market securities.
Radix Asset Management Limited (“the Manager”) is a start-up company, with a track record of barely over a year. The manager’s license mandate covers, the management of unitised/collective schemes, investment portfolios and provision of advisory services for individuals and institutions. Radix AM has been accorded a management quality (“mq”) rating of BBB-(NG)(mq) by GCR based on evaluation of its corporate profile, skill and experience in portfolio management, sufficiency of risk management, controls and systems. The Manager is leveraging on the track record of Radix Capital Partners Limited in entering into the asset management space, with its capability regarding management of unitised funds yet to be tested.
The fund’s investment policy streamlines permissible investment to investment grade rated securities, with the initial weighted average credit rating estimated at A-(NG)(f) by GCR based on proposed initial portfolio structure.
Liquidity risk for Radix HF is considered minimal given the nature of the targeted investment securities, which are high quality debt and money market securities. However, cognisance is also taken of the fact that some of the investment securities also have potential exposure to liquidity risk based on market condition.
The accorded indicative rating and outlook relate to a long-term view subject to the underlying assumptions being included in the transaction documents. The rating and outlook is to be converted to final upon the receipt of all final transaction documents.
An upward review of the rating may follow successful launch of the fund, ability to maintain strict compliance with the investment policy and portfolio mix, while maintaining a good fund performance track record. However, the rating may be revised downward following a disparity breach or non-compliance with underlying assumptions and mandate. Furthermore, a negative rating action on the manager may result in a rating downgrade.
NATIONAL SCALE RATINGS HISTORY
Initial/last rating (September 2020)
Manager quality rating: A-(NG)(f)
Senior Credit Analyst
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APPLICABLE METHODOLOGIES AND RELATED RESEARCH
Global Criteria for rating Banks and Other Financial Institutions, updated March 2017
Glossary of Terms/Ratios, February 2016
RATING LIMITATIONS AND DISCLAIMERS
SALIENT FEATURES OF ACCORDED RATINGS
GCR affirms that a.) no part of the rating was influenced by any other business activities of the credit rating agency; b.) the rating was based solely on the merits of the rated entity, security or financial instrument being rated; c.) such rating was an independent evaluation of the risks and merits of the rated entity, security or financial instrument; and d.) the validity of the rating is for 12 months, or as indicated by the applicable rating document.
Radix Asset Management Limited participated in the rating process via face-to-face management meetings and other written correspondence. Furthermore, the quality of information received was considered adequate and has been independently verified where possible.
The fund rating has been disclosed to Radix Asset Management Limited with no contestation of/changes to the rating.
The information received from Radix Asset Management Limited and other reliable third parties to accord the rating included the Radix Horizon Fund Trust Deed, the Shelf Prospectus, Custodian Agreement as well as the audited annual financial statement of Radix Asset Management Limited for the year ended 31 December 2019.