Some MFs have significant exposure to subordinated/ perpetual bonds of Yes Bank. These MFs stare at huge valuation losses if the credit rating of these bonds is cut below investment grade. Thread (1/9)
a) Reliance Nippon ~ Rs. 2150 Cr.
b) Franklin Templeton ~ Rs. 540 Cr.
c) UTI ~ Rs. 445 Cr.
d) Kotak ~ Rs.115 Cr.
a) Nov 24, 2018 - downgraded to AA- from AA.
b) May 03, 2019 - downgraded to A from AA-.
c) July 24, 2019 - downgraded to BBB from A.
1) If the credit rating goes below BBB-, MFs will slash the value of bonds by 25-100% passing on significant valuation losses to investors.
a) Reliance MF - Rs. 700 Cr (Morgan Credits)
b) Franklin MF- Rs. 300 Cr (Yes Capital)
These promoter structures rely heavily on the price of Yes Bank shares. 7/9