During the week, these FMPs saw NAVs drop in range of 4-10 per cent, following the default in interest payments by DHFL, which triggered a 75 per cent markdown on these exposures. Industry sources said that if DHFL continues to delay, more FMP investors could get impacted.
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Close to a dozen FMPs of Reliance MF and UTI MF — which have exposures to DHFL — are maturing in the next three months. Their total exposure to DHFL papers stands at Rs 111 crore. Close to Rs 73 crore of investor money is exposed to DHFL debentures in Reliance MF’s FMPs. As a percentage of individual schemes’ assets, exposures to DHFL ranged from 6-10 per cent.
Data from Value Research shows that another FMP of Reliance MF (Fixed Horizon Fund XXX-Series 3) — which has 10.3 per cent of assets exposed to DHFL — is due for maturity on June 10. Besides Reliance MF, UTI MF has an FMP that matures on June 18 and with an 8 per cent exposure to DHFL’s debentures. The FMP in question is Fixed Term Income Fund (Series XXIV-XV).
According to fund managers, some FMPs will have to hold back the units on behalf of investors till DHFL makes the payment.
“FMPs exposed to DHFL’s debt papers may see a side-pocket getting created as a natural outcome of DHFL’s further delay in servicing its debt obligations. Under current norms, FMPs are allowed to hold units in a side-pocket for two years,” said a fund manager.
Overall, 56 FMPs are exposed to DHFL’s debt papers, with Rs 419 crore of investor money riding on these exposures, shows data from Value Research. The DHFL management has assured lenders that it is taking all efforts to ensure the dues are settled at the earliest.
In an exchange note on Friday, the housing finance company re-iterated that it will settle pending payments pertaining to some of its debentures within seven days.
UTI MF takes 100% markdown
UTI MF on Friday stated that it is taking a 100 per cent markdown on its debt exposure to DHFL. “We anticipate enhanced pressure and legal action on DHFL from all creditors, including exercise of the early redemption clause. This is expected to further delay recovery efforts of the company,” the fund house’s statement read.
Following this move, the fund house’s markdown on these exposures has increased from 75 per cent to 100 per cent. “If there is any recovery in future, the provision will be written back to the scheme on actual receipt basis,” the fund house added.
Besides this, it introduced exit load for UTI Treasury Advantage Fund, UTI Ultra Short Term Fund, UTI Short Term Income Fund, UTI Dynamic Bond Fund and UTI Bond Fund. This will only be applicable to new investors entering the fund from June 7. This move was aimed “to deter speculative action in the funds”, where NAVs were marked down on account of DHFL exposures.