Franklin MF shuts 6 debt schemes over redemption pressure, liquidity crunch

MF distributors fear investors could start to withdraw their investments in large quantum from debt schemes, following Franklin Templeton's move

Franklin Templeton Mutual Fund (MF) on Thursday decided to wind up six of its debt schemes oriented towards high-yield investments -- with a combined asset base of Rs 25,856 crore -- citing continued redemption pressure and lack of liquidity in the debt markets amid the lockdown and the coronavirus pandemic.

According to industry sources, Franklin Templeton MF had over Rs 3,000 crore of borrowing.

“In the current environment, it has been difficult to generate liquidity, especially for credit papers, which are low on the credit curve,” said Sanjay Sapre, president at Franklin Templeton MF. 

As the cost of generating liquidity