After IL&FS and DHFL, it now the turn of Reliance ADAG companies. In the past few days Ratings agencies have downgraded the ratings of Reliance Capital, Reliance Home Finance (RHFL) and Reliance Commercial Finance.
- CARE Ratings downgrades ₹12700 crores worth of long-term bank facilities from BBB+ to D
- CARE also downgraded ₹5,000 crore of debt issued by Reliance Commercial Finance from BBB+ to C.
- CARE again downgrades ₹4980 crores of long-term debt issued by Reliance Home Finance from BBB+ to D.
- ₹12320 crores of debt downgraded fro BBB/BBB+ to C.
- ICRA downgrades commerical papers issued by Reliance Capital, Reliance Commercial Finance and Reliance Home Finance commercial paper from ICRA A2 to ICRA A4.
Here’s how the bonds in cash market reacted:
|Symbol||Series||YTM at LTP (%)||LTP||Close||% Chng||Open||High||Low|
Impact on mutual funds
Mutual funds have around ₹2600 crores of exposure to Reliance Home Finance and Reliance Commercial Finance.
What will mutual funds do now
Depends on how the mutual funds value the securities. In case of a default, they will have to write off 100% of the value and the NAV will fall by that extent.