As Franklin Templeton begins to repay, debt fund investors can breathe easy

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Investors in Franklin Templeton’s suspended debt programs can breathe a sigh of relief with SBI Funds Management starting to credit the 9,122 crore excess cash to investors’ bank accounts on Tuesday.

In accordance with the Supreme Court ruling, SBI Funds Management has started the process of repaying approximately 3 lakh investors in the five of the six debt programs that turned positive.

The full refund is expected to be completed in two or three days, as 30,000 payments are made in a single batch and around 3 to 5 batches are processed in one day, sources said.

Investors who have not received the amount should first check and update their KYC and should contact the fund company, if the amount is not credited within three days, the sources added.

After payment, the fund house extinguishes the equivalent units from the investors account while keeping their units in the separate account. Confirming receipt of the money, NS Raghavan, an investor in the Franklin India Ultra Short Bond Fund, said better sense has finally prevailed given the type of anxiety experienced over the past nine months and hopes that more money will be paid by selling the remaining investments of the program. in a time-limited way.

Separate portfolio

Investors holding units in a separate portfolio in Suspended Debt Funds will not receive any payments at this time.

The debt funds had invested 2,100 crore in Vodafone Idea and another ₹ 510 crore in Yes Bank AT1 bonds (additional level I). These investments were turned into separate wallets after they defaulted on their coupon payment last year.

So far the fund company has received 1,250 crore, including a 100 crore voucher from Vodafone Idea.

Franklin India Low Duration Fund, Short Term Income Plan, Income Opportunities, Credit Risk Fund and Dynamic Accumulation Fund hold side pocket shares of Vodafone Idea Security.

The fund’s investments in Vodafone Idea expire on September 2, 2023.

However, Franklin Templeton can exercise a “put” option which is due to expire on September 3, 2021. A “put” option gives bondholders the right to demand repayment of capital before maturity.

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