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TMI BlogFramework for Corporate Debt Market Development Fund (CDMDF)X X X X Extracts X X X X X X X X Extracts X X X X ..... n Alternative Investment Fund namely, Corporate Debt Market Development Fund ( CDMDF or the Fund ), to act as a Backstop Facility for purchase of investment grade corporate debt securities, to instil confidence amongst the participants in the Corporate Debt Market during times of stress and to generally enhance secondary market liquidity by creating a permanent institutional framework for activation in times of market stress. 2. CDMDF shall comply with the Guarantee Scheme for Corporate Debt (GSCD) as notified by Ministry of Finance vide notification no. G.S.R. 559(E) dated July 26, 2023 , which includes the Framework for Corporate Debt Market Development Fund. 3. In addition to the abovementioned scheme as mentioned at para 2 abov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gs, the most conservative long term rating shall be taken for a given short term rating. 3.4. CDMDF shall follow the Fair Pricing document as placed at Annexure A while purchase of corporate debt securities during market dislocation. 3.5. CDMDF shall follow the loss waterfall accounting, as prescribed at Annexure B. 3.6. CDMDF shall disclose Net Asset Value (NAV) of the fund by 9:30 PM on all business days on website of its Investment Manager and AMFI. For times when CDMDF would have exposure to corporate debt, such NAV shall be disclosed by 11 PM on all business days. 3.7. Purchase allocation and trade settlement of corporate debt securities bought by CDMDF during market dislocation: Keeping in view the prudential limits ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... porate debt securities: a. Valuation policies prescribed for Mutual Funds (based on the principles of fair valuation). b. Previous day s valuation of securities by valuation agencies before the date of Purchase. c. Average 10 days valuation prior to start of market dislocation. d. Mark-up in yield over previous day may be limited to arrive at floor price. For eg: it may be 25/50/75 bps over AAA/AA/Below AA securities respectively. e. Consideration of Spread over benchmark/ spread over sovereign yields. f. Qualitative factors that may have bearing on arriving at fair price. 2. The investment policy shall be duly approved reviewed periodically by the Board of Trustee, Investment Committee Governance Committee. CDMD ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th Mutual Fund industry, the following shall be the approach for reflection of waterfall in the NAV of units of CDMDF A. There shall be three classes of units to be allotted by CDMDF, which shall be as follows: 1. Class A1 and Class B units shall be allotted to AMCs and Sponsor/IM respectively (against one time contribution of 0.02% of AUM of specified debt schemes and Sponsor/IM commitment). Class A1 units and Class B units are treated at par and referred as Class A1 units only. 2. Class A2 units shall be allotted to specified debt schemes (contributing 0.25% of AUM of specified debt schemes) 3. Class A3 units shall be allotted to Mutual Fund schemes selling debt securities to the Fund (where 10% of the consideration is in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and A2 units are to be protected at their opening NAV to that extent the excess/unabsorbed loss/expense would be debited to only A3 unit class. This would mean the NAV of A3 units could drop below the NAV of A1 A2 4. Any subsequent profits/gains/income will be first credited to the A3 unit class to an extent that they come back at par with A1 A2 NAV, and then the balance to be apportioned to all the three unit class. 5. A3 units will not get any exit till there is an outstanding portfolio from market dislocation and leverage is completely paid. 6. Any subsequent allotment of A3 units would be at the same NAV as that of the existing A3 units (if they exist), otherwise at opening NAV of A1 and A2. There will be only one class/bucke ..... X X X X Extracts X X X X X X X X Extracts X X X X
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