Change in MF investment pattern to affect NBFCs, says Ind-Ra
|
24 Feb 2016
|
| Non-banking financial companies (NBFCs), especially housing finance companies (HFCs), are likely to witness a slowdown in the appetite for their bonds as a result of the recent revision of investment norms for debt-oriented mutual fund managers, says India Ratings and Research (Ind-Ra). According to the rating agency, the present portfolio composition indicates the overall sector exposure for NBFCs and HFCs stands at around 30 per cent, and is broadly in line with the revised norms, suggesting the incremental appetite is likely to be tepid at best. Ind-Ra’s study of portfolio compositions of the largest five schemes (in terms of assets under management) of each of the five largest fund houses (again in terms of assets under management) suggests that from end-December 2015 to end-January 2016, the fund houses have already aligned their portfolios leading to a spike in yields. Ind-Ra believes the sectoral limits will be the key binding limit for asset allocation since the fund houses’ exposures to single and group issuers are largely within the prescribed limits. The study suggests that the existing exposures show a high concentration to the NBFC space (excluding HFCs) – average exposure being over 17 per cent of the scheme size. On the other hand, concentration in the HFC space ranges between 10 per cent-13 per cent on an average. Among HFCs, single scheme exposures are heavy on selected credits such as HDFC Ltd, Indiabulls Housing Finance and LIC Housing Finance. Ind-Ra does not expect the impact of the Securities and Exchange Board of India guidelines on the corporate debt market to be disruptive in the near term, especially in light of the realignment already underway and a tepid issuance pipeline. However, as NBFCs continue to grow, an uptick in issuances could reflect in a higher cost of borrowings since the guidelines limit pro-cyclical exposures. |
Source: Dion Global Type: Performance
© 2024 Rediff.com India Limited. All rights reserved. Disclaimer - Terms of Service - Privacy Policy - Feedback