The market regulator has specified that mutual funds have to buy only highly rated paper. So, how did the fund companies manage it? With pliant rating agencies, this is no problem. The ratings have been rated AAA by the same ratings agency, CARE, which also rated the Rana Kapoor’s structure as AAA. Commenting on this a very high net worth investor says “ratings is the biggest scandal going.”
This structure of using public funds for lending against the promoters’ holding is fraught with huge risks. The mutual funds are holding a debt paper of the holding company with no other assets and no capital worth speaking of. They have no recourse to the shares of the promoters either—the only asset of the holding company—because these are not pledged to the mutual funds. The promoters are free to sell them. If they do, funds have no recourse.
Read more at https://www.moneylife.in/article/mutual-funds-have-also-lent-to-dhfl-promoters-holding-company-just-like-yes-banks-rana-kapoor/55811.html
This structure of using public funds for lending against the promoters’ holding is fraught with huge risks. The mutual funds are holding a debt paper of the holding company with no other assets and no capital worth speaking of. They have no recourse to the shares of the promoters either—the only asset of the holding company—because these are not pledged to the mutual funds. The promoters are free to sell them. If they do, funds have no recourse.
Read more at https://www.moneylife.in/article/mutual-funds-have-also-lent-to-dhfl-promoters-holding-company-just-like-yes-banks-rana-kapoor/55811.html
No comments:
Post a Comment