Rating agency CRISIL has placed its 'BBBmfs' rating on JP Morgan India Treasury Fund of JP Morgan AMC under 'notice of withdrawal' for three months. The move has come on the request of the AMC. The rating remains on 'watch with negative implications'.
Late September, CRISIL had downgraded its rating on the Treasury Scheme to 'CRISIL BBBmfs (Watch with Negative Implications)' from 'CRISIL A+mfs (Watch with Negative Implications)' as the credit quality of the scheme's portfolio had become inconsistent with the previous rating.
On September 28, 2015, the fund house had allowed redemption in the scheme, following segregation of the specified security in the scheme's portfolio upon receipt of unit holders' approval. This resulted in intensified redemption pressure in the scheme, and therefore, an increased weightage of the specified security. The downgrade in the scheme's rating reflects the expected increase in the weighted average credit score for the portfolio.
The rating remains on 'Watch with Negative Implications' as CRISIL expects the redemption pressure on this fund may remain elevated. Should the redemption pressure exceed current expectation, the weightage of the specified security in the portfolio will increase significantly, further weakening the scheme's credit quality. CRISIL will remove the rating from watch once there is adequate clarity on the steady-state composition of the underlying securities in the scheme's portfolio. CRISIL will continue to analyse the scheme's portfolio regularly to ensure the scheme's credit quality remains consistent with the current rating, and will take appropriate rating action whenever warranted.
The JP Morgan Treasury Scheme was one of the trouble-hit funds due to the default in payment by Amtek Auto.