Some of the papers held by those schemes were not listed. SEBI had come out with a rule some time ago that unlisted paper can’t be bought by mutual fund, but ongoing buyers can keep the paper.
Also most of the papers would be paid in full (atleast that’s the hope) and unit holders will get their money back in due course (2028 for the long term scheme). They may get early also cause a lot of liquidity in the money markets are due to corona virus. If the liquidity is lifted then the AMC can sell the paper in their possession.
What I thought would happen is that NIFTY would tank on the news, but it seems people are really REALLY bored sitting at home and bidding up shares for god-knows-why.
Assume more such fund closures in future, it would be a domino affect. As more and more people come to realise that they hold debt fund in their portfolio, they will try to sell and due to lack of cash in the system won’t be able to. RBI at best can release cash to banks for them to specifically loan money to mutual funds based on the paper they possess - then again, many of the paper possessed by mutual funds are risky.
If they had gotten good ratings at good times, that may not be the case now, but then again, SEBI will probably ask rating agencies to stop the work-from-home thing.
PS: Whatever it takes.