NAVs of Franklin MF Schemes dip on markdown of ADA group and Essel Infra debt securities

The net asset values (NAV) of five fixed income schemes of Franklin Templeton Mutual Fund fell up to 3.4% on March 9 after the fund house further marked down the debt securities of Anil Dhirubhai Ambani (ADA) and Essel Infraprojects in its portfolio, reports The Economic Times. 
 
The schemes affected are Franklin India Short Term Income Plan (Number of Segregated Portfolios - 3) FISTIP, Franklin India Dynamic Accrual Fund (Number of Segregated Portfolios - 3) FIDA, Franklin India Low Duration Fund (Number of Segregated Portfolios - 2) FILDF, Franklin India Income Opportunities Fund (Number of Segregated Portfolios - 2) FIIOF and Franklin India Credit Risk Fund (Number of Segregated Portfolios - 3) FICRF. Due to this markdown, the NAVs of these schemes fell between 0.41% and 3.37%. 
 
In the case of ADA group, earlier on February 24, the NCDs were valued based on a cumulative haircut of 72.99%. On March 9, the fund house has marked down the security by 95% of Face Value (FV) on a cumulative basis. In the case of Essel Infrastructure Limited (EIL), earlier on December 5, the NCDs were valued based on a 50% haircut, as the bank loan facility of the issuer was downgraded to Default (D). On March 9, they were valued again and an additional haircut of 35% was taken. The cumulative haircut factored in the value of EIL now stands at 85% of FV on a cumulative basis. 
 
In a note to investors, the fund house said: “Global stock markets have fallen sharply over the past few days as investors continue to worry about the broader economic effects of coronavirus outbreak. Data coming from various countries are pointing at the intensification of the outbreak….Further, longer than expected time to monetize assets has increased dependency on listed share collateral for recovery. Due to all these factors and due to continued stress in the issuer groups, we have further marked down NCDs of Essel Infraprojects Ltd, Reliance Big Pvt. Ltd and Reliance Infrastructure Consulting & Engineering Pvt. Ltd to reflect the same at fair value.” 
 

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