BIZ-ILFS-DOWNGRADES
- Country:
- India
Crippled IL&FS group faced
Tuesday more embarrassments after India Ratings downgraded its
various mutual fund schemes and placed them on a rating watch
negative (RWN).
The agency downgraded three series-1, three series- 2
and two series -3 mutual fund schemes of the group, "due to
the deterioration in the underlying portfolio quality of the
schemes due to its exposure to IL&FS group entities.
The RWN reflects absence of clarity on the resolution
of the above referred assets in the portfolio due to the poor
financial profile of the sponsor group, which IL&FS, it said.
All IL&FS IDF schemes generally have an exposure of
around 23.55 per cent in group companies --IL&FS Solar Power
and IL&FS Wind Energy, whose credit profile has weakened.
IL&FS and its group companies are facing liquidity
crisis and had defaulted on debt repayments.
The rating agency said the ratings do not factor in
the expectation of the default risk for the scheme itself, as
a fund/scheme generally cannot default.
"The ratings should be interpreted as an opinion about
the strength of the fund's investment policies, the expertise
and experience of the sponsors and investment managers, and
the scheme's vulnerability to severe losses," it said.
The ratings also do not address the risk of a loss due
to changes in the prevailing interest rates, credit spreads
and other market conditions, the agency said, adding the
comments on the adequacy of market value to address the extent
to which fund expenses and costs may reduce distributions to
unit holders.
(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)
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