- The email and attached documents, which were seen by Bloomberg and confirmed by the company, laid out the latest timeline for scheduled cash flows. The timing could wind up being sooner, as any sale of the underlying assets in the frozen funds in the secondary market and prepayments or accelerated payments made by issuers of debt in the funds would quicken the payout, according to the documents.
- The development is the latest turn after the company shut six debt schemes last month in the country's biggest-ever fund freeze, which triggered shock waves in local credit markets.
- Franklin Templeton last month shut its six fixed-income and credit-risk funds locking in Rs 30,800 crore of investor monies. The country's debt markets have been reeling since the pandemic prompted authorities to institute the world's biggest stay-at-home restrictions, which worsened liquidity in some corporate bond trading.
- High net-worth individuals, corporate investors and retail investors usually invest in these debt funds due to higher returns offered by such funds in comparison to bank deposits and easy liquidity.
- The funds which were shut down were: Franklin India Low Duration Fund, Franklin India Dynamic Accrual Fund, Franklin India Credit Risk Fund, Franklin India Short Term Income Plan, Franklin India Ultra Short Bond Fund and Franklin India Income Opportunities Fund.
- The country's credit markets which were already under stress caused by the collapse of major infrastructure financier IL&FS in 2018, are facing tough scenario as the economy has been hit hard by the strict lockdown meant to curb the deadly coronavirus outbreak.
- Days after Franklin shut its debt mutual fund schemes, the Reserve Bank of India announced a special liquidity facility worth Rs 50,000 crore for mutual funds in a bid to ease liquidity pressures in the sector as well as lift investors' confidence.
- The RBI had reiterated that it remained vigilant and would take any steps necessary to mitigate the economic impact of COVID-19 and preserve financial stability.
- The Securities and Exchange Board of India (SEBI) rebutted claims that tighter rules pushed Franklin Templeton into freezing six debt funds last month, and said the asset manager should focus on returning the $4.1 billion to investors.
- With assets worth more than Rs 86,000 crore as of the end of March, Franklin Templeton is the ninth largest mutual fund in the country, having set up shop over two decades ago. Franklin Templeton was long known for its focus on lower-rated papers such as "AA" and "A", and in turn higher yields for its investors.
