Franklin debt schemes collect Rs 669 cr in Jan 1-15 period; 65% cash back in low duration fund
The six schemes have received total cash flows of Rs 13,789 cr from maturities, pre-payments and coupon payments since April 24 last year
Franklin Templeton Mutual Fund’s six debt funds have collected Rs 669 crore in the January 1 to 15 period, which is 45% less than Rs 1,213 crore it collected in the previous fortnight of Dec. 16 to 31, 2020. As much as Rs 617 crore was received as pre-payments.
So far, the 6 schemes received total cash flows of Rs 13,789 crore as of January 15, 2021 from maturities, pre-payments and coupon payments. More than half of this amount has been received from securities rated “A”. Much of this cash has been generated from securities which were unlisted, or where FT was a majority holder. The total inflows received across 6 schemes is over 40% higher than anticipated in the maturity profile published in April 2020.
The total cash available for the five cash positive schemes stands at Rs 9,190 crore, subject to fund running expenses. The total cash available with 5 schemes is lower than total cash flows because a portion was used to retire debt that the funds were forced to take in a bid to honour redemptions before April 24, 2020.
All the cash received by the six schemes are without any secondary market sale (active monetization) of the securities. This points to the fact that the securities held in the funds can be monetized at fair value if given appropriate time under normal market conditions.
Individually, Franklin India Low Duration Fund, Franklin India Ultra Short Bond Fund, Franklin India Dynamic Accrual Fund, Franklin India Credit Risk Fund and Franklin India Short Term Income Plan have 63%, 50%, 41%, 26% and 9% of their respective AUM in cash.
Borrowing levels in Franklin India Income Opportunities Fund currently stands at 6% of AUM, which is unchanged from last fortnight.
As you may be aware, some writ petitions were filed in the matter of winding up of six of Franklin fixed income schemes in April 2020. On December 3, 2020, the Hon’ble Supreme Court issued an interim order allowing the Trustee of Franklin Templeton to seek consent of the unitholders for the winding up of the six schemes under Regulation 18(15)(c) of the SEBI (Mutual Funds) Regulations 1996.
The unitholders consent vote took place from December 26 to December 28, 2020 followed by the Unitholders meet via video conference on December 29, 2020.
The result of the e-voting along with the report of the observer appointed by SEBI will be submitted to the Hon’ble Supreme court in a sealed envelope. Further steps will be taken as per the directions of the Hon’ble Supreme Court. The next hearing in this matter is expected to be held in the 3rd week of January 2021.
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