Mumbai: UTI Mutual Fund on Friday said it has increased the markdown to Dewan Housing Finance (DHFLNSE -11.34 %) debt securities to 100 per cent from 75 per cent in the schemes, which has an exposure to the housing finance company, considering the high level of uncertainty as to recovery timelines and value.
The fund house added that if there is any recovery in future on these securities, the provisions will be written backto the schemes on actual receipt basis.
“UTI MF anticipates that there would be enhanced pressure and legal action on DHFL from all creditors, including exercise of early redemption clause and legal options by various lenders,” the fund house said in a press release.
“This is expected to further delay the recovery efforts of the company in disposal of its assets in an orderly manner. Furthermore, there is no secondary market for such securities in the current scenario,” it added.
UTI MF has an exposure of Rs 1,235.34 crore in its debt schemes to DHFL debt securities, according to data from Value Research.
Its exposure to DHFL debt securities through schemes is highest in the industry. Of the mutual fund debt schemes total exposure to DHFL debt papers, UTI MF’s debt schemes have an exposure of 28.6 per cent.
Also, UTI MF introduced an exit load in the UTI Treasury Advantage Fund, UTI Ultra Short Term Fund, UTI Short Term Income Fund, UTI Dynamic Bond Fund and UTI Bond Fund effective from June 7, and said such introduction of the exit load will be applicable only to investors who invest in these schemes from June 7 onwards and not to existing investment.
It added such exit load is introduced to deter speculative action in the funds and to safeguard the interests of the existing investors.
On June 4, DHFL had interest and principal payments due to the tune of around Rs 1,100 crore to the industry and investors, but the company failed to repay on the scheduled date.
UTI MF said it had taken a 75 per cent markdown to DHFL debt securities in the schemes that have as exposure to DHFL, as per the standard haircut table for sub-investment grade debt securities which has been provided by valuation agencies -Crisil & Icra, along with Association of Mutual Funds in India (Amfi).