New Delhi: Credit rating agency ICRA has placed the ratings of six mutual fund schemes under watch with negative implications because of their exposure to special purpose vehicles of the IL&FS group where debt repayments are becoming increasingly uncertain, the agency said in a press release.

The funds are HDFC Short Term Debt Fund, HDFC Banking and PSU Debt Fund, UTI Banking and PSU Debt Fund, UTI Bond Fund, UTI Dynamic Bond Fund, and Aditya Birla Sun Life Short Term Opportunities Fund.

"The rating action takes into account the deterioration in the credit quality of the underlying investments of these schemes driven by their exposure to special purpose vehicles (SPVs) of IL&FS Limited. ICRA notes that the above schemes have exposures to IL&FS SPV, namely, Hazaribagh Ranchi Expressway Limited (HREL) or Jharkhand Road Projects Implementation Company Limited (JRPICL) or Jorabat Shillong Expressway Limited (JSEL)," the note said. "The default risks by various SPVs of IL&FS have increased given the recent communication by their management to trustees expressing to stop future repayments citing their interpretation of an order given by National Company Law Appellate Tribunal (NCLAT) on October 15, 2018. Further, in January 2019, two SPVs of IL&FS demanded a refund of the debt payment executed by them post October 15, 2018, from their trustees. Despite a ring-fenced structure and adequate cash flows to service the debt obligations, the SPVs have asked the trustees to stop debiting the SPVs’ escrow account towards future obligations."

Mint reported last week on IL&FS informing certain creditors that it does not intend to continue debt repayment, armed with an interim order from the NCLT.

As on December 31, 2018, the exposure of HDFC-STDF and HDFC-BPSU to HREL stood at 0.55% and 0.29% of assets under management of the schemes (AUMs), respectively. The exposure of UTI Banking and PSU Debt Fund, UTI BF and UTI DBF to JSEL stood at 6.87%, 5.98% and 6.25% of AUMs of the schemes, respectively.

The exposure of Aditya Birla Sun Life Short Term Opportunities Fund to JRPICL stood at 1.15% of AUM.

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