Mumbai: The net asset values (NAVs) of debt schemes of UTI Mutual, Nippon India Mutual and Aditya Birla Sun Life Mutual holding bonds of Vodafone Idea dipped between 1 per cent and 10 per cent on Saturday after the fund houses marked down the values of their holdings of the telecom operator’s papers. A day earlier, NAVs of six Franklin schemes holding Vodafone securities fell between 4.28 per cent and 6.87 per cent, adjusting for the markdown. The decline in NAVs followed the Supreme Court’s decision to reject review petitions of various telecom companies challenging its judgement in the adjusted gross revenue (AGR) case.

Vodafone Idea is seen as the most impacted by the judgement. The company has a total debt of close to Rs 98,000 crore as of September 2019.

The fall in NAVs of many of these schemes was more than half of their annual returns of 7-10 per cent.

Among the open-ended schemes, UTI Credit Risk Fund has been hit the hardest due to its 17.55 per cent exposure to Vodafone Idea debt. Its NAV fell 10.42 per cent, wiping out more than a year’s return. UTI Bond fund fell 4 per cent, Nippon Hybrid Bond fell 3.83 per cent, while Aditya Birla Savings and Aditya Birla Equity Hybrid 95 fell by 1.2 and 1.02 per cent, respectively. Among the closed-end FMPs that took a hit, Nippon Fixed Horizon – XXV-15 fell 4.8 per cent and UTI Fixed Term XXX – IX (1266 days) fell 3.08 per cent.


“UTI AMC has decided to value the NCDs of Vodafone Idea at the lower of the two prices provided by the valuation agencies with effect from January 17, 2020. UTI AMC would review the valuations based on future developments and keep the investors informed,” said UTI AMC in a note to investors.

Mutual funds cumulatively hold Rs 3,348-crore of Vodafone Idea papers. Franklin holds paper worth Rs 2,049 crore, Aditya Birla Sun Life Rs 508 crore, Nippon India Rs 241 crore and UTI MF Rs 551 crore.

The decline in NAVs after the Supreme Court judgement adds to the list of instances in the last couple of years where mutual fund investors in debt schemes had to take a hit on account of delayed repayments, defaults or credit rating downgrades by companies.


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