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1/ While we are on the subject of Franklin Templeton and the mutual fund industry and their portfolio of AA and below illiquid names...
@latha_venkatesh @andymukherjee70 @dugalira @menakadoshi @SumairaAbidi @NagpalManoj @ActusDei @BalakrishnanR @ShereenBhan @TamalBandyo
@latha_venkatesh @andymukherjee70 @dugalira @menakadoshi @SumairaAbidi @NagpalManoj @ActusDei @BalakrishnanR @ShereenBhan @TamalBandyo
2/ ...we might also want to take cognizance of the fact that many bonds in India are probably over-rated as compared to the western world. We have too many companies with AAA and AA ratings that do not deserve it - size seems to play a major factor in the rating process.
3/ Everyone is well aware of the rating shopping that takes place in India. If a corporate does not expect a good rating from one shop, go to the next smaller one and bargain for a one or maybe even a two-notch higher rating.
@suchetadalal @Moneylifers https://economictimes.indiatimes.com/markets/stocks/news/rbi-blasts-credit-rating-agencies-for-allowing-rating-shopping-to-large-borrowers/articleshow/73016267.cms?from=mdr
@suchetadalal @Moneylifers https://economictimes.indiatimes.com/markets/stocks/news/rbi-blasts-credit-rating-agencies-for-allowing-rating-shopping-to-large-borrowers/articleshow/73016267.cms?from=mdr
4/ A year or so back, the legendary Edward Altman, inventor of the Z-score, came to India. Attended one of his seminars conducted by @CFASocietyIndia. At that time, 38 companies in India had the AAA badge as compared to 2 in the US - Microsoft and J&J. https://twitter.com/abhuwalka1/status/1093216710428188675?s=20
5/ Altman was critical of the fact that there were too many of AAA around. He said, "...it is too easy (in India) to get a AAA and AA rating. The financial community, investors, maybe even banks, are being misled by those high ratings." https://www.bloombergquint.com/business/bankruptcy-expert-edward-altman-says-its-too-easy-to-get-a-high-credit-rating-in-india
6/ We have seen enough instances of 'falling off the cliff' recently - think IL&FS and DHFL - both AAA once before becoming D in a few weeks time.
Hence just because a mutual fund scheme has all or mainly AAA / AA+ names, it does not mean that investor can afford to rest easy.
Hence just because a mutual fund scheme has all or mainly AAA / AA+ names, it does not mean that investor can afford to rest easy.
