Altico Capital India Ltd, a real estate lender, failed to pay around Rs 20 crore worth of interest on an External Commercial Borrowing (ECB) that was due to Mashreq Bank a UAE based financial institution, on 12th September. On the same day, Altico was downgraded from AA- to B by  CARE rating. Altico Capital’s long term issuer rating was downgraded to ‘D’ by India Ratings and Research, on 13th September.
According to data from Rupeevest through paper such as non-convertible debentures (not ECBs), Mutual Funds have a collective exposure of about Rs 538 crore to the Altico. Out of this, UTI Credit Risk Fund has a 200 crore exposure or about 5.69% of assets and Reliance Ultra Short Duration Fund has a Rs 150 crore exposure or 4.61% of scheme assets. The balance exposure of around Rs 188 crore is held by Fixed Maturity Plans (FMPs) of UTI Mutual Fund and Reliance Mutual Fund.
On 13th September, Reliance Mutual Fund suspended inflows into Reliance Ultra Short Duration Fund. Previously, the fund house had amened the Scheme Information Documents of several of its open-ended debt funds to insert an enabling provision for side pockets. On 24th September the entailed giving investors a 30 day exist load free window period is set to expire. The Trustees of Reliance Mutual Fund have approved the creation of a side pocket in Reliance Ultra Short Duration Fund with effect from 25 September in relation to the Altico default, after the exit load free period expires.
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