 "Franklin Templeton India sells debt holding in JSPL")
Franklin Templeton Investments (India) has sold its entire debt holding in Jindal Steel and Power (JSPL).
The fund house has exited from six JSPL schemes maturing over the next two to five years, at Rs 67.5 per bond against a face value of Rs 100, taking a one-time hit of Rs 325 crore. The net asset value (NAV) of these schemes was between 0.1 per cent and 0.49 per cent on Thursday. ICICI Prudential, held JSPL securities worth almost Rs 386.25 crore as February 29.
Both ICICI Prudential MF and Franklin Templeton had, done a 25 per cent mark-down in valuation after the JSPL paper was downgraded to below investment grade last month. By the norms, a mark-down on any further downgrades is left to the discretion of the internal valuation committee of the fund house.
In a note on its website, Franklin Templeton said: “JSPL securities have been sold completely from the...schemes in two tranches on February 29 and March 10. After today’s transaction, debt schemes of Franklin Templeton Mutual Fund have nil exposure to JSPL securities.”
In February, the fund house had pruned its exposure to the Naveen Jindal-promoted entity, to Rs 728.9 crore from the earlier Rs 1,588.8 crore. On Wednesday, rating agency CRISIL downgraded the bank facilities and debt programmes of JSPL to ‘D’, from BB+/A4+. Instruments rated D are in default or expected to soon be.
Earlier this year, CRISIL had downgraded JSPL to below investment grade. “The valuation of the investments made by various schemes in all debt instruments, including JSPL, is carried out at fair valuation in accordance with the valuation policy under Sebi regulations,” said an ICICI Prudential MF spokesperson.
Adding that the fund house was monitoring developments on its exposure to JSPL (0.3 per cent of its total debt assets). “JSPL has demonstrated a track record of on-time repayment to mutual funds (having redeemed debt instruments of around Rs 2,300 crore since September 2015).
"We derive comfort that JSPL continues to enjoy a healthy market position in the steel industry. It has proposed plans for refinancing of its bank borrowings under the 5/25 scheme and active efforts to divest/monetise assets are expected to help them deal with servicing its debt obligations,” he said.