Bharti AXA MF Launches Regular Return Fund

Bharti AXA Mutual Fund has announced initial offer period of Bharti AXA Regular Return Fund, which is an open ended income scheme. The fund opens for new issue on 28 January 2009 and remains open till 24 February 2009. The NFO price for the fund is Rs 10 per unit. The scheme will re-open on 16 March 2009. The Scheme seeks to generate regular income through investments in fixed income securities and also to generate long term capital appreciation by investing a portion in equity and equity related instruments.The scheme will offer two plans viz. eco and regular plan with growth & dividend options. Dividend option will further offer dividend payout and reinvestment facility. Dividend reinvestment option will have with monthly, quarterly and annual frequency of dividend re-investment. Dividend pay-out option for regular income will be having monthly, quarterly and annual frequency. Eco plan is available for purchase transactions of up to Rs 2 lakh only. Where the value of any purchase transaction is greater than Rs 2 lakh, then such investments can be placed only in regular plan. Both plans will have common portfolio. The minimum investment amount for both eco and regular plan is Rs 10,000 and in multiples of Re 1 thereafter. Additional investments in an existing folio can be made for Rs 1000. The Mutual Fund seeks to raise a minimum subscription amount of Rs. 1 crore during its New Fund Offer period.

Mutual Funds turn sympathetic towards Unitech

Mutual funds, over time, have become sympathetic to Gurgaon-based realt estate company Unitech Ltd. Though the company will have to repay debt to the tune of Rs 1,100 crore to mutual funds over the next one week, there are many magnanimous fund managers out there who are willing to rollover the debt for some more time.
"Most funds have invested into asset-backed papers. Moreover, if there is rollover of debt, investors stand to gain significantly from increased yields (anywhere between 14 and 16%). Considering Unitech's large asset bank, a default is simply out of question," said the CEO of a domestic fund house.
According to a survey conducted by Matrix Financial Services, various mutual fund schemes have an exposure of over Rs 1,433 crore in Unitech Ltd, through several debt papers issued by the company. Several schemes of Reliance MF, HSBC MF and Sundaram BNP Paribas MF have exposure (to Unitech debt) in the range of Rs 50 crore and Rs 300 crore.
"Unitech does not have a credit problem; it is only constrained by a severe liquidity crunch. From what we understand, the company is ready to pay 40% of the money due to mutual funds in the coming week. We are ready to rollover the remaining 60% for another 20 days or a month," said the fixed income manager of a fund house attached to a PSU bank.
Close to downgrading Unitech's long-term rating to 'B (Ind)' from 'BBB (Ind)' about a week ago, Fitch Ratings, on Wednesday, downgraded Pass Through Certificates (PTCs) that are directly linked to the rating company's national long-term and short-term ratings of Unitech Ltd.
The downgrade signals the company's continued delay in raising the required funds as earlier projected and increasing uncertainty regarding its ability to service its interest cost and fulfil its immediate debt payment obligations.
"In case, there is a potential payment delay on account of liquidity issues expected from an issuer of a bond in a fund's portfolio, one of the ways this kind of challenge is temporarily met is by replacing the bond with another instrument of the same issuer. However, this would affect the cashflow position of the fund," Crisil fund service head Krishnan Sitaram.
If there is a redemption request at that time, the options of meeting that can then be by selling that security or some other security in the portfolio or by availing of a bank loan, Mt Sitaram added.
The company has convened an EGM on January 19 to discuss various nagging issues. According to mutual fund sources, the company is also meeting a couple of banker on January 16 and 17 to decide on loan restructuring.
"We'll be comfortable with a rollover. Many of our investors are willing to reinvest in fresh short-term paper issued by Unitech. Many will also be looking to invest in other debt plans. I guess, there wouldn't be a big repayment issue," said the debt fund manager of a Mumbai-based fund house.
Given the weak operational cashflows, the company will resort to asset sales or debt restructuring over the near-term. According to a BNP Paribas report, forced asset sales in the current environment could further erode equity value. Management indicated that it is in the process of raising Rs 800 crore to tide over the near-term liquidity crisis. Failure to do so could lead to forced sale of underlying assets - primarily land, the report said.

Source: http://economictimes.indiatimes.com/articleshow/3987776.cms

Fitch affirms 'AAA (ind)' rating of IDFC Liquid Fund

Fitch Ratings has today affirmed IDFC Liquid Fund's National rating at 'AAA(ind)'. The rating reflects the fund's highest standards for credit quality and its conservative investment approach, relative to other liquid funds in India. The agency has considered the fund's investment policies, management capabilities, risk management procedures and supporting controls in ensuring consistency with management's objectives.
As of 29 December 2008, 96% of the portfolio was invested in assets rated 'F1+ (ind)'/'AAA (ind)' or equivalent, while the minimum credit rating of securities held was 'F1' or equivalent. Fitch notes that the portfolio management team intends to maintain the fund's credit quality when choosing new investments. However, the poor liquidity of lower rated securities in the Indian debt market may put the portfolio credit quality under stress, should assets held in the portfolio be downgraded.
The fund faces concentration risk as at end-December 2008; a large portion of the fund's assets are invested with debt securities of just three issuers, of which the largest, in terms of portfolio exposure is a Government supported entity, hence partially mitigating this concentration risk.
The investment manager of the mutual fund is IDFC Asset Management Company Pvt. Ltd. The sponsor of the mutual fund is IDFC, a diversified financial institution providing a range of financing products and services with infrastructure as its focus area.
Fitch's National fund credit ratings are assigned on a scale of 'AAA(ind)' to 'C(ind)', on a rating scale similar to that of Fitch's National Long-term credit ratings, with 'AAA(ind)' indicating the highest credit quality standards within the country. The assigned rating provides a relative measure of the fund creditworthiness only in comparison with other funds in India as it is a National rating. It is therefore not internationally comparable. Fitch's bond fund credit rating do not consider the effect of market risk on net asset value ("NAV") movements, and are not an indication of the stability of the fund's NAV. Such issues are assessed in Fitch's bond fund volatility ratings.

Source: http://news.moneycontrol.com/india/news/pressnews/fitch-affirmsaaaind-rating-idfc-liquid-fund/14/00/379201