The schemes being put under watch include a short term debt funds and banking and PSU debt funds from HDFC, banking and PSU debt fund, bond fund, dynamic bond funds from UTI , Aditya Birla Sun Life short term opportunities fund, Icra said in statement Tuesday.
The rating action is due to the "deterioration in the credit quality" of the underlying investments of these schemes driven by their exposure to special purpose vehicles (SPVs) of IL&FS Group, the agency said.
These schemes have exposure to Hazaribagh Ranchi Expressway, Jharkhand Road Projects Implementation Company, and Jorabat Shillong Expressway, the agency said.
"The default risks by various SPVs of IL&FS have increased after the recent management communication to the trustees expressing to stop future repayments citing their interpretation of an order given by National Company Law Appellate Tribunal on October 15, 2018," the agency explained.
Two SPVs of IL&FS demanded a refund of the debt payment executed by them after October 15, 2018 from their trustees, it added.
"Despite a ring-fenced structure and adequate cash flows to service the debt obligations, these SPVs have asked the trustees to stop debiting the SPVs escrow account towards its future obligations," it said.
The exposure of two HDFC funds to Hazaribagh Ranchi Expressway stood at 0.55 percent and 0.29 percent of their AUMs, respectively, as of end December, it said.
The same for three UTI funds to Jorabat Shillong Expressway stood at 6.87 percent, 5.98 percent and 6.25 percent of AUM, according to Icra.
The Aditya Birla Sun Life short term opportunities fund has an exposure to Jharkhand Road Projects Implementation Company stood at 1.15 percent, it added.
In case of delays in honouring its obligations by these SPVs, their ratings are likely to be downgraded, impacting the credit scores of these MF schemes, it said.
The key rating driver will be the ability of these schemes to rebalance the portfolios within a month of any rating action, the agency said, adding it will continue monitoring the portfolios.
It can be noted that IL&FS group, which has debt outstandings of over Rs 94,000 crore, which has not been serviced since September last, has been defaulting on its payment commitments since August last year. Initially, the exposure to SPVs which are delivering steady cash flows were considered to be among the safer bets taken by financiers.