PGIM debt funds’ NAV falls up to 30%

PGIM, formerly DHFL Pramerica, said the NCDs of Reliance Broadcast are backed by pledged shares of Reliance Nippon Asset Management.

BCCL
Data compiled by financial information provider Morningstar showed that mutual funds have exposure to the tune of Rs 148.71 crore to Coffee Day Natural Resources Pvt Ltd.
The net asset value (NAV) of some debt funds of PGIM India Mutual Fund fell by as much as 30 per cent in a day after CARE downgraded the ratings on the non-convertible debentures (NCDs) of Anil Ambani's Reliance Business Broadcast News Holdings to “D”.

Schemes of three fund houses — PGIM, UTI Mutual Fund and L&T Mutual Fund hold securities worth Rs 654.5 crore, according to Rupee-Vest as on August 31, 2019.

  • 5.84%Annualized Return for 3 year
  • >3 years Suggested Investment Horizon
  • 9.9 YearsTime taken to double money
  • -8.61%Annualized Return for 1 year
  • 6 months – 1 year Suggested Investment Horizon
  • N.ATime taken to double money
CARE on September 12 downgraded the ratings for Rs 850-crore NCDs of Reliance Business Broadcast. Four open-end schemes of PGIM India Mutual Fund holding securities of Reliance Business Broadcast, which owned news channel BTVI, have taken a hit due to this downgrade. PGIM India Ultra Short Term Fund, which has assets of Rs 41 crore, saw its NAV fall by 30.29 per cent, PGIM India Short Maturity Fund with assets of Rs 111 crore saw its NAV fall by 21.33 per cent, PGIM Low Duration Fund with assets of Rs 176 crore saw its NAV fall by 6.23 per cent and PGIM India Credit Risk Fund with assets of Rs 489 crore saw its NAV fall by 2.69 per cent on September 13.


L&T Credit Risk Fund saw its NAV fall by 0.78 per cent. UTI did not mark down its NAV as it expects recovery on account of the collateral, which are Reliance Nippon Life Asset Management shares. Japan's Nippon Life is set to take over the mutual fund from Reliance Group In a note to investors, PGIM India MF said, “Various schemes of PGIM India had outstanding exposure aggregating to Rs 289 crore in two ADAG companies namely Reliance Business Broadcast News Holdings and Reliance Commercial Finance. Of this amount we have received repayment of Rs 134 crore on September 13. A further repayment of Rs 15 crore would be received on September 16. Residual principal exposure after repayment of these two repayments would stand reduced to Rs 149 crore.”

The fund house marked down its bonds to 50 per cent as per the standard valuation practice for loan against shares (LAS) structures. This will be reflected in the NAVs of the funds carrying this exposure.

PGIM, formerly DHFL Pramerica, said the NCDs of Reliance Broadcast are backed by pledged shares of Reliance Nippon Asset Management.
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