HDFC Mutual Fund marks down exposure to Simplex Infra

HDFC Mutual Fund’s debt scheme, which invests in lower-rated papers, has marked down the value of its holdings in Simplex Infrastructures after rating agency CARE downgraded the company from BBB to BB+. HDFC Credit Risk Debt Fund has an exposure of Rs 124.11 crore to secured non-convertible debentures (NCDs) issued by Simplex Infrastructures on November 25, 2019. After the mark down, the value of the security in the portfolio is at Rs 106 crore.

The exposure of HDFC Credit Risk Debt Fund — the largest in the category with assets of Rs 14,625 crore as of October 31, 2019 — to Simplex is a less than 1% of its total assets.

As per Amfi guidelines, after a downgrade below investment grade for a company in the infrastructure sector, a scheme should mark it down by 15%.

In a note to investors, the fund house said, “CARE Ratings has downgraded the rating of the NCDs issued by Simplex Infrastructures from BBB to BB+. The ratings continue to be on negative outlook”.

Credit risk funds have seen outflow of Rs 17,517 crore since April 2019. The appetite for companies with lower ratings has shrunk in recent months in the wake of the NBFC.


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