The recent downgrade of Dewan Housing Finance Corporation Ltd.’s (DHFL) papers could impact mutual fund (MF) assets worth almost ₹5,300 crore, ₹5236.53 crore to be precise, across fund houses with as many as over 200 schemes having an exposure to the troubled housing finance entity.
While in most schemes, the share of DHFL papers constitutes only a minor part, there are a few in which the exposure is over 10% of the overall scheme portfolio, as per data from Value Research, a mutal fund tracking entity.
According to the data, JM Financial Mutual Fund, Tata Mutual Fund, BNP Paribas Mutual Fund, Baroda Mutual Fund, Principal Mutual Fund and UTI Mutual Fund, among others, have schemes that, as on April 30, had an exposure of more than 10% of the scheme’s assets to debentures of DHFL. DHFL Pramerica Floating Rate Fund has almost 32% of its assets in DHFL debentures while DHFL Pramerica Medium Term Fund — Regular Plan has an exposure of almost 26% of its total assets to such debentures.
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DHFL Pramerica Short Maturity Fund and DHFL Pramerica Low Duration Fund also have a sizeable exposure towards the papers of the entity in the midst of liquidity woes.
Ratings agency ICRA had downgraded the commercial paper of the lender to junk grade after the housing finance company delayed interest payment to the investors of its non-convertible debentures (NCDs).
Market participants said the recent downgrade, along with the IL&FS issue, would make MFs wary of subscribing to debt papers of NBFCs, thereby leading to higher costs of borrowing and selective lending.
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