HSBC Mutual Fund Schemes Write Off Exposure To DHFL’s NCDs
HSBC Mutual Fund had taken a haircut of nearly 75% after two DHFL NCDs defaulted in August and September 2019.
HSBC Asset Management India Pvt. Ltd. has written off its exposure to the troubled housing financier Dewan Housing Finance Corporation Ltd.
The write-offs were undertaken in two debt schemes of the fund house—HSBC Short Duration Fund and HSBC Low Duration Fund, according to a disclosure on the asset manager’s website.
The assets under management of these two schemes stood at Rs 324.67 crore and Rs 128.3 crore, respectively, as on March 31. They had declined to Rs 188.10 crore and Rs 82.98 crore, respectively, as on May 8.
HSBC Mutual Fund had taken a haircut of nearly 75 percent after two non-convertible debentures of DHFL defaulted in August and September 2019. The two NCDs are rated Care D.
“Due to the Covid-19 pandemic and resultant national lockdown, the (DHFL’s) resolution process has been delayed,” HSBC Mutual Fund said. “In addition, financial markets are facing acute volatility and tight liquidity. Further, there are trading/settlement restrictions applicable on matured NCDs.”
“Given that recovery of money in the foreseeable future seems difficult and the economy downturn triggered by the pandemic is only expected to accelerate in the near term, we have decided to further mark down the matured DHFL NCDs from 75 percent to 100 percent,” the fund house said.
The mutual fund had a total exposure of Rs 100 crore to DHFL’s commercial papers. The total impact of the current markdown would be Rs 17.41 crore to the short duration fund—or 9.26 percent of the assets under management—and Rs 9.33 crore to the low duration fund, or around 10.87 percent of its AUMs.
Earlier, on April 30, Principal Mutual Fund had completely marked down its exposure to DHFL NCDs from six of its debt schemes.