InvestorQ : Do all defaults result in the kind of crisis that was seen in the case of IL&FS?
Ashoka Patkar made post

Do all defaults result in the kind of crisis that was seen in the case of IL&FS?

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3 years ago
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No. Not all defaults result in a financial crisis that was witnessed in the market the past few days.

The extent of the fall, in such a scenario, depends on the nature of the downgrade. In IL&FS’ case the downgrade was steep and sudden. The company went from top-rating to below-investment grade rating. Thus, the impact on IL&FS was severe.

Reports suggest that mutual funds schemes that had exposure to IL&FS and its group companies witnessed a 25% hit in the price of their holdings.

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