PGMI debt fund’s NAV falls up to 30%

PGMI debt fund’s NAV (Net Asset Value) falls up to 30%

When the net asset value (NAV) of some debt funds of PGMI India Mutual funds 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 Bussiness Broadcast news holdings to “D”.PGMI debt fund’s 

On August 31, 2019, According to Rupee Vest Schemes of three fund houses PGMI, UTI, and L&T Mutual Fund hold securities worth RS 654.5 Crore.

On September 12th the Reliance Bussiness Broadcasts ratings of RS 850 Crore NCDs were downgraded by the CARE. Due to this downgrade four open open-end schemes of PGMI India Fund holding securities of Reliance Business Broadcast, which owned news channel BTVI, have taken a hit. And on September 13th  there is a NAV fall by 30.29 percent of PGIM India Ultra Short Term Fund which has assets of Rs 41 crore. And also there is an NAV fall by 21.33 percent of PGIM India Short Maturity Fund which has assets of Rs 111 crore. There is an NAV fall by 6.23 percent of PGIM  Low Duration Fund which has assets of Rs 176 crore and there is an NAV fall by 2 percent of PGIM India Credit Risk Fund which has assets of Rs 489 crore.

By 0.78 percent L&T Credit Risk Fund has seen the fall of its Net Asset Value (NAV). UTI is expecting a recovery on the account of the collateral, Which is Reliance Nippon Life Asset Management shares. So UTI did not mark down its NAV(Net asset value). PGIM India Mutual Fund said that in a note to investors, Japan’s Nippon Life is set to take over mutual funds from Reliance Group. In two ADAG companies namely Reliance Bussiness Broadcast News Holdings and Reliance Commercial Finance, various schemes of PGIM India had an outstanding exposure aggregating to Rs 289 crore. Here on September 13th among all this amount repayment of Rs 134 crore was received and on September 16th a further repayment of Rs 16 crore would be received. The residual principal exposure would stand reduced to Rs 149 crore after the repayment of these two repayments.

As per the standard valuation practice for a loan against shares (LAS) structures the fund house marked down its bonds to 50 percent. This will be reflected in the NAVs of the assets conveying this presentation.

The NCDs of Reliance Broadcast is assisted by promised shares of Reliance Asset Management said by PGIM, formerly DHFL Pramerica.

 

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  • […] call attention to that since valuations of the illiquid or defaulted resource are disagreeable, the NAV of the illiquid resource won’t be discoverable. Investors will frequently think that it is […]

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