Franklin’s 6 debt funds get Rs 330 cr between Nov 28 to Dec 15; total collection nears 12,000 cr

Cash available stands at Rs 7,488 cr for four loan-free schemes of the total six, and could be paid out to unit-holders if the court allows

Kumar Shankar Roy   /   December 17, 2020
Franklin's 6 debt funds

As the 6 fixed income schemes of Franklin MF inch towards winding up, the half a dozen funds have collected Rs 330 crore from maturities, pre-payments, and coupon payments during the period November 28 to December. This fortnightly amount is lower compared to the preceding period. During Nov 28-Dec 15 period, 36% of the money came in as pre-payments, indicating the strength of the borrowers who even in a Covid-19 affected economy are repaying debt earlier than expected. Read on to know more.

Cash stash

The 6 schemes have received total cash flows of Rs 11,907 crore as of December 15, 2020 from maturities, pre-payments, and coupon payments since April 24, 2020.

Over the latest fortnight (November 28 – December 15), the 6 schemes received Rs 330 crore, of which Rs.118 cr was as pre-payments. The pre-payments should assuage some worries of investors about the portfolio health of the six embattled debt funds.

The cash available as of December 15, 2020 stands at Rs 7,488 crore for the four cash positive schemes, subject to fund running expenses. The four loan-free schemes are Franklin India Low Duration Fund, Franklin India Ultra Short Bond Fund, Franklin India Dynamic Accrual Fund, and Franklin India Credit Risk Fund.

Scheme level scan

Individually, Franklin India Low Duration Fund, Franklin India Ultra Short Bond Fund, Franklin India Dynamic Accrual Fund, and Franklin India Credit Risk Fund have 49%, 48%, 34%, and 16% of their respective AUM (assets under management) in cash.

Borrowing levels in Franklin India Short Term Income Plan and Franklin India Income Opportunities Fund continue to come down steadily and currently stands at 1% and 16% of their respective AUM. These two schemes can return monies to investors only after paying all the obligations/ liabilities towards borrowings/ expenses/provisions.  
Franklin India Short Term Income Plan is expected to be the 5th scheme to attain cash-positive status soon, as borrowing levels have come down to just Rs 43 crore from Rs 943 crore.

Winding-up process

The Supreme Court permitted the Trustee of Franklin Templeton Mutual Fund to seek the consent of the unitholders for the winding up of the six schemes. The Trustee has issued a notice dated 6 December 2020 for seeking the consent of unitholders. The e-voting for the same will held from 26-28 December 2020 followed by a unitholder meet on 29 December 2020.

Redemptions will continue to be suspended till the date of the next hearing scheduled in the third week of January 2021. We believe that the order issued by the Supreme Court will be helpful in ensuring orderly monetization and distribution of scheme assets, Franklin Templeton MF said.

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