Debt mutual funds cut exposure to debentures issued by PSUs

Move amid rising concerns over deteriorating financial health

Debt mutual funds (MFs), which account for the bulk of sectoral assets, have cut exposure to debentures issued by public sector undertakings (PSUs) by nearly 200 basis points (bps) since April.

This comes amid deteriorating financial health of some of the state-owned institutions, particularly banks.

At the end of March, exposure to PSU bonds and debt issuances stood at Rs 1.33 lakh crore or 11.7 per cent of the total of debt assets under management (AUM). By July, fund managers had pruned it to Rs 1.26 lakh crore or 9.9 per cent of the AUM.

On the other hand, debt