New Delhi: CARE Ratings downgraded the debt worth ₹106.30 crore issued by Morgan Credits Pvt. Ltd from BB to D (default) on 20 July. Four schemes of Nippon India Mutual Fund have exposure to debt of Morgan Credits.
Morgan Credits is owned by the family of Yes Bank Ltd co-founder Rana Kapoor, who is currently in judicial custody for alleged violation of the Prevention of Money Laundering Act (PMLA).
“The revision in the rating of the above instrument is on account of the company’s inability to repay post exercise of the put option by the investor on account of stretched liquidity,” a note released by the ratings agency said.
Data from RupeeVest, an online mutual fund distributor, indicates that virtually all of this debt was held by Nippon India Mutual Fund, indicating that the asset management company (AMC) may have exercised the put option. A put option gives the holder of the debt the right to encash a security before maturity.
