Publish Date:
UTI Mutual Fund is about to create a segregated portfolio in two of its debt schemes (UTI Credit Risk Fund and UTI Medium Term Fund) that hold debt exposure in securities issued by Zee Learn.
Notably, the debt securities of Zee Learn have been downgraded from AA to B (below investment grade) by CARE Ratings on July 7.
The bad assets of Zee Learn will be segregated from portfolios of UTI Credit Risk Fund and UTI Medium Term Fund.
As on May 31, 2020, UTI Credit Risk Fund held securities of Zee Learn worth Rs 41.34 crore, forming around 8.87% of its portfolio allocation. At the same time, UTI Medium Term Fund held 2.91% of its assets in securities issued by Zee Learn, valued at Rs 3.44 crore.
As stated by the fund in its note to investors, the above securities were rated AA(SO) by CARE Ratings Limited on March 12, 2015, on the basis of an unconditional and irrevocable undertaking from Zee Entertainment Enterprises Ltd (rated CARE AA/ A1+ on September 11, 2014) for funding of a Debt Service Reserve Account (“DSRA”) to cover any shortfall in servicing outstanding obligations of the said securities 7 days prior to the due date as per the repayment schedule.
Existing investors in UTI Credit Risk Fund and UTI Medium Term Fund (as of the day of creation of the segregated portfolio) shall be allotted an equal number of units in the segregated portfolio as those held in the main portfolio.
No subscription or redemption will be allowed in the segregated portfolio of the two schemes.
UTI Credit Risk Fund already has 3 segregated portfolios due to its exposure securities issued by Altico Capital, Vodafone Idea Ltd., and Yes Bank.
UTI Medium Term Fund has 2 segregated portfolios containing securities issued by Vodafone Idea Ltd., and Yes Bank.