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BOI AXA scheme’s NAV slumps 15.34% on Sintex BAPL writeoff

The move is aimed at protecting investors even as bonds continue to be rated ‘A’.

, ET Bureau|
Updated: Jun 15, 2019, 09.38 AM IST
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MUMBAI: BOI AXA Credit Risk, a debt mutual fund scheme that invests in lowly-rated papers, saw its net asset value (NAV) dip by 15.34 per cent on Thursday after the fund house wrote down 55 per cent of its investments in Sintex BAPL, a subsidiary of Sintex Plastics.

Earlier on Wednesday, parent Sintex Industries defaulted on its repayment of about Rs 90 crore worth of bonds.

Sintex BAPL constituted 22.78 per cent of the scheme’s assets under management of RS 533 crore as of May 2019, as per data from Value Research. The fund holds four securities of Sintex BAPL maturing in 2020, 2021 and 2022, respectively.

BOI Axa Credit Risk Fund decided to mark down its holdings to protect existing investors even though the bonds of the company continue to be rated A by Brickworks. In a filing with the BSE, the company claimed the present liquidity crisis is temporary and will not affect its going concern.

“Based on illiquidity in the bond due to rating downgrade of a group company, the investment committee decided to mark down the paper by 55 per cent so that the true NAV is reflected,” said Alok Singh, CIO, BOI AXA Investment Managers.

The scheme has seen sharp redemption after the breakout of the IL&FS crisis that spread to other NBFCs and indebted companies.

Since September 2018, assets under management of the scheme have shrunk from Rs 1,700 crore to Rs 533 crore as investors redeemed from riskier credit risk funds. In October last year, the scheme had written off its entire exposure to IL&FS of Rs 105 crore, in which it had a 6.13 per cent holding in the commercial paper.

After the fund house sold liquid paper in its portfolio, the percentage holding of Sintex BAPL increased from about 9 per cent to 23 per cent.

Due to these mark downs, in the last one year, investors have lost 24.48 per cent in the fund.

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BOI AXA scheme’s NAV slumps 15.34% on Sintex BAPL writeoff

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