13 AMCs have debt exposure worth over Rs 2900 crore to IL&FS entities

With ratings agencies downgrading debt securities of IL&FS group firms, the natural question posed by debt MF investors is how are AMCs placed with respect to these companies. MFs buy debt of corporates, and when such debt sees trouble, there are definite implications for MF investors. The liquidity profile of the IL&FS Group is at present stretched given the sizeable repayment obligations at group level in the near term. Infrastructure Leasing & Financial Services, the unlisted parent, has already lost its investment grade rating. Value Research data shows that as many as 13 AMCs, through 34 debt & hybrid schemes, have over Rs 2900 crore exposure to various debt instruments, as of August 2018. AMC wise A lot of the debt exposure to IL&FS entities is via Fixed Maturity Plans (FMPs), liquid funds, corporate bond funds, credit risk funds, medium, ultra short and low duration funds. In the hybrid space, the exposure is through conservative hybrid funds, aggressive hybrid funds, balanced hybrid, dynamic asset allocation funds and arbitrage schemes. Our data shows AMCs are exposed to 7 IL&FS entities, viz., IL&FS Energy Development Co Ltd., IL&FS Transportation Networks Ltd., IL&FS Tamil Nadu Power Company Ltd., IL&FS Transportation Networks Ltd., IL&FS Education and Technology Services Ltd., Infrastructure Leasing & Financial Services Ltd. and IL&FS Securities Services Ltd. As of August 31, LIC Mutual Fund appears to have the most debt exposure to IL&FS group firms in absolute terms. Its LIC MF Liquid Fund has nearly Rs 697 crore invested in commercial paper of IL&FS Securities Services and IL&FS Financial Services Ltd. As a percentage of AUM (assets under management), LIC MF Liquid Fund has 4.19% exposure to these entities. The securities mature this month. Do note that all the data is as on August 31 and AMCs could have rejigged the portfolios to lower exposure in the past 10 days. DSP Mutual Fund has the second highest exposure to IL&FS in terms of absolute assets. As many as 7 debt schemes had Rs 628.78 crore worth of debt exposure to IL&FS entities. The exposure is in form of structured obligation and debenture. These securities, belonging to IL&FS Transportation Networks and IL&FS Energy Development Co, are slated to mature March 2019 onwards. Aditya Birla Sun Life Mutual Fund has exposure worth Rs 607.94 crore through 6 schemes. It is exposed to IL&FS Education and Technology Services and IL&FS Tamil Nadu Power Company. The securities mature 2020 onwards. AMCs like Tata (Rs 240.95 crore), Principal (Rs 124.46 crore) and HSBC (Rs 104.91 crore) also had exposure worth Rs 100 crore or more. Union, Motilal Oswal, Kotak, Mirae, UTI and Invesco had exposure worth between Rs 30 crore to Rs 99 crore each. Interestingly, big AMCs like ICICI Prudential, Reliance, SBI, HDFC, Axis and Franklin Templeton, etc. do not figure in August 2018 ex