Money & Banking

Bank of Baroda Mutual Fund creates segregated portfolio

Mumbai | Updated on March 06, 2020

Bank of Baroda Mutual Fund has created a segregated portfolio of its investment in YES Bank.

As of March 6, Baroda Treasury Advantage Fund and Baroda Credit Risk Fund have exposure to YES Bank’s 9 per cent Perpetual BASEL III-compliant Additional Tier I (18-Oct-2022) issued by the bank.

Pursuant to the downgrade of rating of debt instruments of YES Bank to D (default category) by ICRA on March 6, Baroda Mutual Fund proposes to create a segregated portfolio in respect of the above security of YES Bank with effect from Friday, subject to approval from the board of directors of Baroda Trustee India.

The security of YES Bank held in the schemes will be marked down to a value of zero on March 6. The valuation adjustment reflects the realisable price of the security on the date of valuation, said the fund house.

In the draft reconstruction plan for YES Bank announced by the RBI, the instruments qualifying as Additional Tier 1 Capital issued by YES Bank, under the Basel III framework, shall stand written down permanently in full from the appointed date.

All existing investors in the two schemes, as on the day of creation of the segregated portfolio, shall be allotted an equal number of units in the segregated portfolio as held in the main portfolio. Once the segregated portfolio is created, no subscription or redemption will be allowed in the segregated portfolio of the captioned schemes. The fund house will list the units of segregated portfolio on the recognised stock exchange within 10 working days of creation of segregated portfolio and enable the transfer of such units on receipt of transfer requests.

Upon recovery of money from the segregated portfolio, money so recovered will be distributed to investors in proportion to their holdings in the segregated portfolio. Investors redeeming their units from now on will get redemption proceeds based on the NAV of the main portfolio and will continue to hold units of the segregated portfolio.

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Published on March 06, 2020
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