Unit Trust of India's (UTI) investment in 'safety' rated debt instruments, that is, debt papers which carry ratings varying from 'AAA' to 'BBB', dropped to 67.6 per cent in September 2001 from 76.5 per cent in June 2001.
According to a Business Standard Research Bureau study, UTI's investment in debt, spread across 61 schemes, dipped to Rs 21,194 crore in September from Rs 22,341 crore in June. Of this, safety rated debt instruments accounted for Rs 14,317 crore against Rs 17,081 crore in June.
The observations are based on schemes for which comparative data is available. However, the study excludes the US-64 since it does not disclose 100 per cent of its portfolio holdings.
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The September ratings for the debt instruments have been compiled by BSRB since UTI's portfolio for the month did not specify the ratings on the instruments, whereas the June ratings have been disclosed by the fund in its portfolio.
Of the total debt investment, exposure to 'AAA' rated instruments plunged to 21.1 per cent from 32.1 per cent as on June. This was primarily skewed by the downgrading of Industrial Development Bank of India in July from 'AAA' to 'AA+', indicating high safety from highest safety earlier.
The 61 schemes' combined investment in IDBI's debt instruments at Rs 2,140 crore accounted for 10 per cent of the fund major's entire debt exposure in September.
Consequently, the share of 'AA+' papers jumped to 21.4 per cent in September from 3.8 per cent in June.
Meanwhile, investment in 'A' instruments, which indicates adequate safety, dropped to 9.7 per cent from 13.4 per cent in June. 'BBB' investments, which indicate moderate safety, accounted for 4.8 per cent against 6.2 per cent in June.
UTI has churned its debt portfolio during the period. It increased its exposure in 'AAA' instruments of the State Bank of India, Standard Chartered Grindlays Bank, Central Bank of India and Bank of Baroda. While among corporates UTI reduced its exposure to Larsen and Toubro and Grasim.
Jet Airways was among the corporate picks with a 'AAA' instrument during the period. UTI also increased its exposure to other corporates such as Reliance Petroleum, Birla AT&T Communication, National Aluminium and Tata Industries.
Despite the drop in exposure to safe debt instruments, the overall share of debt in UTI's corpus increased during September. Of the 61 schemes total corpus, debt accounted for 71.1 per cent against 64.8 per cent in June.
The shift could be attributed to the drop in valuation of equities and also redemption during the period. This is amply reflected in the corpus of the 61 schemes which shrunk from Rs 34,489 crore in June to Rs 29,804 crore in September.