Franklin Templeton Mutual Fund's six shut schemes generate Rs 438 crore

 Franklin Templeton Mutual Fund has said its six shut schemes have received Rs 438 crore from maturities, pre-payments and coupon payments in the second half of October.

This amount takes the total cash flows received to Rs 8,741 crore since closing down of the schemes in April, the fund house said in a statement.

Franklin Templeton MF had closed six debt mutual fund schemes on April 23, citing redemption pressures and lack of liquidity in the bond market.

The schemes -- Franklin India Low Duration Fund, Franklin India Dynamic Accrual Fund, Franklin India Credit Risk Fund, Franklin India Short Term Income Plan, Franklin India Ultra Short Bond Fund, and Franklin India Income Opportunities Fund -- together had an estimated Rs 25,000 crore as assets under management (AUM).

"The six schemes have received Rs 438 crore from maturities, pre-payments and coupon payments during the period October 16-29, 2020," Franklin Templeton MF said.

Individually, Franklin India Ultra Short Bond Fund, Franklin India Low Duration Fund, Franklin India Dynamic Accrual Fund and Franklin India Credit Risk Fund have 42 per cent, 25 per cent, 20 per cent and 5 per cent of their respective assets under management (AUM) in cash.

Franklin MF takes 50% haircut on exposure to Essel group-backed firm

Franklin Templeton Mutual Fund (MF) has taken a 50 per cent haircut on exposure to Diligent Media Corporation - the holding company backed by Essel group, that operated the DNA newspaper.

The fund house had Rs 412 crore of exposure to non-convertible debentures (NCDs) of Diligent Media Corporation, spread across five of its schemes. This includes the outstanding interest payments.

In a note, Franklin Templeton MF, said, "Post the downgrade, the NCDs are now valued by FTMF at 50 per cent of the face value with effect from 12 December 2019, based on standard Amfi prescribed haircut. It may be noted that these NCDs are also backed by personal guarantee of Mr Subhash Chandra."

On Thursday, ICRA had downgraded the NCDs of Diligent Media Corporation to B, from BB. The agency said, "the long-term rating revision factors in the poor liquidity position and continued weak performance of Diligent Media."

Further, the fund house highlighted that the rating agency had not considered the credit enhancement from Zee Media Corporation, which has a "satisfactory" operating performance and is rated BB by CARE.

"We have also incorporated the personal guarantee of Mr Subhash Chandra with respect to our exposure," the fund house pointed out.

The NCDs held by the fund house's schemes will mature in June, 2020.

The schemes exposed to these NCDs were Franklin India Income Opportunities Fund (exposure of 1.2 per cent of net assets), Low Duration Fund (0.3 per cent exposure), Dynamic Accrual Fund (0.5 per cent), Credit Risk Fund (0.2 per cent) and Short Term Income Plan (1.1 per cent exposure).

ICRA pointed out that Essel group's promoters refinancing ability has weakened significantly in the current scenario. The rating agency expects repayment by Diligent Media to be met through refinancing or partly through asset sale.

Earlier in the month, the fund house had marked down its exposure to Essel Infraprojects, spread in four of its schemes. This was after Brickwork ratings downgraded the long-term and short-term bank facilities of the company to the default grade 'D'.

Four Franklin Templeton schemes hit on markdown in Essel Infraprojects

Four of Franklin Templeton's schemes exposed to Essel Infraprojects, the infrastructure arm of Essel group, saw their net asset values (NAVs) slip between 0.4 per cent and two per cent on Thursday, after marking down the exposure to the firm's debentures.

According to data from Value Research, Franklin India Low Duration Fund (exposure of 4.1 per cent of scheme assets) saw a two per cent dip in its NAV on Thursday. The Short Term Income Plan and Credit Risk Fund (each with 1.25 per cent exposure) were down 0.76 per cent and 0.77 per cent, respectively. The Dynamic Accrual Fund, which had 0.39 per cent exposure, lost 0.4 per cent.

On Thursday, Brickwork ratings had downgraded the long-term and short-term bank facilities of the company to default grade 'D', citing delay in servicing of bank loans. The rating agency also mentioned that the issuer was not co-operating.

According to a source, the securities held by Franklin Templeton MF have not yet received the same downgrade, but the fund house has taken the markdown as a proactive measure.