Relative calm in debt markets after Zee’s agreement with lenders, says Mirae Asset

Mahendra Jajoo, head - fixed income at Mirae Asset Global Investments, spoke to CNBC-TV18 about the Zee group exposure issue and whether institutional investors may redeem their investments in debt mutual funds, which are exposed to the group.

“We have seen number of situations facing MFs over a period of time. In September, we thought the MFs are over and so on - I think it is a big portfolio that the MFs are managing and these kind of situations are once in a while as a percentage of total book is relatively insignificant. Therefore, to say that there will be mass redemption etc is possibly overreacting but yes, some conservative investors might take a call and that is if they believe that NAV is overstated. So if there is a possibility that there is a default, there should be some markdown taken on the NAV,” Jajoo said on Tuesday.

“The liquidity situation is in two parts, one is at the systemic level and the other is at an individual company level. As we saw in September, when there is a systemic liquidity issue, I think the regulators including Reserve Bank of India (RBI) are far more effective, so post IL&FS there was a situation where everyone was facing a great squeeze and RBI did inject liquidity including by view of open market operations (OMOs) and that helped stabilised the system liquidity. I believe that there will be again tight liquidity situation in February-March because of the advance tax outflows,” said Jajoo.