Stuck in quicksand clips for sale series#

'Given the quantum of paper that is coming up for maturity in the next few months, it is unlikely that things are going to settle anytime soon. For example, 50 per cent for the infrastructure sector and 75 per cent for manufacturing and financial institutions. Both the fund houses confirmed to Business Today that they have marked down their NAV as per the prescribed guideline.īased on a March 22 circular by Sebi, Amfi issued a circular on April 30, to apply standard haircuts for sub-standard securities. Similarly, for Reliance Strategic Debt Fund it is down by 3.26 per cent. For instance, UTI Banking and PSU Debt Fund's one-month return is down by 6.37 per cent. Past one-month returns of some debt schemes (as on May 9) are down by over 6 per cent due to this. Some schemes have even lost their entire year's gain as the fund houses have marked down their investment in the downgraded securities. If this happens, the situation could worsen.Īs a result of their exposure to defaulting companies, the debt schemes of several MFs have seen their NAVs erode. 'The standstill agreement ends on September 30, after which MFs and other holders of Essel Group's pledged shares may come to the market to realize dues, if the 'Zee horror show' continues,' says Agarwala. Market experts are being cautious and believe that if the Essel Group fails to repay on the agreed date, the lenders may try to recover from pledged shares. Aditya Birla MF tops the chart as a fund house (Rs 77 crore is in FMPs). HDFC MF's FMPs have the highest exposure of Rs 876 crore. Nine fund houses have exposure of about Rs 6,945 crore to Essel Group companies, according to Morningstar data. 'Given the sharp drop in share prices on sale of a small quantity of pledged shares, their panic selling would have further exacerbated the situation and resulted in sharp drawdowns in investor values,' says Kaustubh Belapurkar, Director-Fund Research, Morningstar. So, even if a few major lenders had invoked the pledged shares, share prices would have fallen and the realised value against the debt would have been significantly lower. For instance, on January 25, 2019, invocation of a mere 0.6 per cent of equity share capital of Zee Entertainment Enterprises (ZEEL) resulted in a fall of 26 per cent in its share price. 'In case of share pledge instruments, the credit risk assessment is largely driven by the price of shares, hence risk assessment of share price is extremely critical,' says Bhushan Kedar, Director, Funds and Fixed Income Research, CRISIL.

These rollovers were caused largely due to restructuring of bonds that were backed by share pledges, say experts. HDFC Mutual Fund also decided to extend the maturity of some of its FMPs for the same reason.

Stuck in quicksand clips for sale series#

Kotak Mahindra Asset Management informed investors of Kotak FMP Series 127 that they would not be able to redeem the entire amount because of the fund's exposure to the Essel Group. 'The shadow banks, NBFCs and MFs, which had lent money to IL&FS and Essel Group to stand, have their backs broken by the massive unpaid dues,' says Alok Agarwala, Senior Vice President and Head of Investment Analytics, Bajaj Capital.įMPs were also caught off guard. Other large companies in trouble include DHFL, Essel Group and Yes Bank.īy late 2018, bad business decisions led a set of large companies to default on their loans leaving behind a financial mess. This has thrown a shadow on MFs' exposure of about Rs 2,500 crore to them. The latest among the series come from Anil Ambani's Reliance Group entities, Reliance Home Finance and Reliance Commercial Finance, which have been downgraded to below investment grade.