Security Level Portfolio and Maturity Profile of FT's 6 winded down debt schemes

[n2ustarzphawl]

The Security Level Portfolio and Maturity Profile of the Franklin Templeton's six winded down debt fund has been released.

You can find them here on the FT's official site here.

• Security Level Portfolio

https://www.franklintempletonindia....30-2020-for-6-schemes-being-wound-up-k9fmj184

• Maturity Profile

https://www.franklintempletonindia....30-2020-for-6-schemes-being-wound-up-k9fmj185

As we had speculations in this sub about Franklin's UST fund's NAAI being down every day after the closure. It can be seen that they sold ICICI bond (ISIN INE090A08TW2) to honor redemption requests made on 23rd April, 2020 before the cut off time. All the bonds that were to mature so far have not defaulted and paid up their dues.

The drop in NAV seemed to be due to the sell of ICICI bond as they took a haircut on it.

I forgot how to check daily AUM, I would be more than happy if someone checks FT UST's current AUM.

 

[annabanaynay]

@n2ustarzphawl

The scheme, on the request of Future group, has extended a moratorium with respect to the below NCDs issued.

Jfc.. the scheme is doing what even banks are thinking twice before doing.

RBI only allowed banks/nbfcs to give moratorium on "loans" and not on NCDs

Delhi High Court already over ruled that NCDs can also get moratorium

https://www.cnbctv18.com/finance/de...using-finance-in-ncd-dues-payment-5835471.htm

 

[matthewpegler]

@n2ustarzphawl How do you know they took haircut?

 

[n2ustarzphawl]

@matthewpegler Compare the value of the ICICI debt as on 23rd April and the value upon selling as stated in the 30th April report.

 

[matthewpegler]

@n2ustarzphawl Maturity value is 692 lakhs on march 2022. Now they sold the bond for 10 lakhs less. This is not haircut, it is normal sale in secondary market

 

[n2ustarzphawl]

@matthewpegler I meant they have calculated value using 692 lakhs on 23rd and now sold at around 10 lakhs less. Hence drop in NAV

 

[matthewpegler]

@n2ustarzphawl How much is the principal and how much is interest

 

[gunderson500]

@n2ustarzphawl

The drop in NAV seemed to be due to the sell of ICICI bond as they took a haircut on it.

To put it more accurately, this has the smell of a distress sale, not a "normal" sale as someone else said and it converted a book loss into a bigger actual loss. The referenced security is a perpetual bond with a 2022 call option. As it is, perps are out of favour and yields have been slightly stressed. Throughout this month, the security has traded at yields of 9.9-10.49%. FT may have sold this at a yield of 11.46%. Sure, it's probably better than waiting till 2022 for the call to materialize. But the evidence suggests that this could have been sold at a better yield.

Edit: some context and clarification: One, this was a small holding in FT UST. Secondly, the 11.46% is the weighted yield for all transactions that day which were around 60 cr face value- FT may or may not have been the only seller. It was holding more than that amount combined in its Corporate Bond Fund and Banking and PSU Fund- we'll know for sure once those portfolios are disclosed and/or trade data is released.

 

[n2ustarzphawl]

@gunderson500 Yeah, they sold it to cover the redemptions that were placed on 23rd April before cut off time

 

[gunderson500]

@n2ustarzphawl What makes you think that? They sold it on 28 April.

 

[n2ustarzphawl]

@gunderson500 Their security level portfolio as on 30th April says that. You can find the link to that in the post.

 

[gunderson500]

@n2ustarzphawl It was sold on 28 April- that's what it says.

 

[n2ustarzphawl]

@gunderson500 Okay

 

[jenib]

@n2ustarzphawl One question: looking at these reports, funds got actual receipt of as much as 5 % (For Franklin india income opportunities fund) in 24th to 30th April. However, this fund hasn't sold any security or none of the securities matured. Where did the money come from ? Were they coupon payments ?

 

[n2ustarzphawl]

@jenib I don't know, maybe someone else would provide the answer. I am following FT UST only cause that's where my money is.

 

[jenib]

@n2ustarzphawl For Franklin UST as well the actual receipts are 2% in that period. Check maturity profile document. There is a small table of actual recepits under maturity profile table

 

[mgreene05]

@n2ustarzphawl Franklin took a huge toll on its debt funds, people have even emptied their liquid fund. Only 3000 crore AUM left from 16000 crores, in March. Its huge brand impact hit.

Although this is very localized. No other AMC faced this. This trend is only for Franklin!

 

[n2ustarzphawl]

@mgreene05 Franklin Templeton is experiencing what we call a classic case of bank run. This situation will aggravate only, unless they see something positive like Vodafone paying back the bond. I think it all started with the Vodafone Idea debacle.

 

[mgreene05]

@n2ustarzphawl You are right. Although I think there is no more run left. People have emptied the franklin shelves. Lol

Especially debt funds are done for franklin for now. And not sure investors will return soon for franklin. 16000 to 3000 imagine for a liquid fund.