The Securities and Exchange Board of India on 2nd September 2020 has allowed debt mutual funds to segregate securities of companies in case they opt for a debt restructuring due to COVID-19 stress.
Sebi in its earlier notification dated 28th December 2018, has stated that the Segregated portfolio can be created in a mutual fund scheme by an asset management company in case of a credit event, which includes downgrade to below investment grade and subsequent downgrades in credit rating by a Sebi-registered credit rating agency, however, it has now been modified that the date of the proposal for restructuring of debt received by AMCs shall be treated as the trigger date for the purpose of creation of a segregated portfolio.
Further such a proposal of restructuring of debt received by AMCs shall be immediately reported to the Valuation Agencies, Credit Rating Agencies, Debenture Trustees and AMFI. AMFI, on receipt of such information, shall immediately disseminate it to its members.
The revised framework shall be in force until December 31, 2020.
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