Mumbai: In another major fallout of the coronavirus crisis, the net asset values (NAVs) of three BOI AXA Mutual Fund’s debt schemes plunged fell after the fund house announced the marking down of its exposure in seven securities across its portfolios.
In a massive plunge, the NAVs of BOI AXA Credit Risk Fund, Conservative Hybrid Fund and Short-Term Income Fund declined in the range of 2 per cent-50 percent on Friday.
The fund house on Friday wrote down its entire holding in Dewan Housing Finance Corporation Ltd (DHFL) and Avantha holdings from earlier levels of 75 per cent. It also increased its haircut in three papers — RKV Enterprise, Accelarating Education and Development, Coffee Day Natural Resources — from the previous 50 per cent to 90 per cent.
BOI AXA also marked down its exposure to Dinram Holdings Private Ltd and Amantha Healthcare by 50 per cent and 75 per cent respectively.
“Considering the severe illiquidity in the debt market, it is estimated that the securities in the portfolio may not be reflecting the realizable value that should form the basis of valuation of NAV of the funds where these securities are held. Hence the Valuation Committee of BOI AXA Investment Managers on April 24, 2020 has revalued the liquid and/or thinly traded securities across the portfolios as summarized,” the fund house said in a statement.
Expressing concern over the liquidity situation, it said the extraordinary situation emanating out of the Covid-19 pandemic has adversely impacted the overall economy and liquidity in the debt markets in the last one month. Many debt mutual funds borrowed heavily to meet redemptions as can be seen from the portfolios of such schemes at the March 2020.
“The future too looks uncertain and any extention of lockdown in certain parts of the country will out further strain on the industrial output and demand metrics impacting companies’ ability to service their borrowings and debt obligations. Taking all these conditions into account, investors are moving to safer assets till the situation improves,” it said.
