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DHFL defaults on repayment of commercial papers

Dewan Housing Finance (DHFL) has been able to meet 40% of its commitment to repay Rs 375-crore for commercial papers, highlighting the stress of cash flow on the troubled mortgage lender that is selling assets to pay off debt.

"Of the total amount of Rs 375 crore, 40% were paid on a pro rata basis, and the balance of Rs 225 crore is to be paid within the next two days," DHFL said in a statement on Tuesday.

A particular asset sales money did not arrive on time, leading to a shortage of money, a source said.

Earlier this month, shortly before the Eid festival, DHFL was unable to meet its payment obligations. At that time, the company did not pay the interest owed on the bonuses sold last year, and then paid the money within the grace period to avoid the standard & # 39; label.

Medium-sized mutual funds, some of which are linked to select banks or large conglomerates, have invested in short-term debt securities, which were raised for payment on Tuesday, market sources told ET. There were a dozen investors in these instruments.

On June 17, ET reported that the Employees' Pension Fund Organization (EPFO) had sought details of DHFL's plans for cash generation, amid growing concerns about delinquency. The largest domestic institutional investor in debt assets sought to redeem half of its investments in DHFLs, exercising the "put option", an exit route given to investors before scheduled maturities.

EPFO invested around Rs 1,300 crore in debt securities sold by DHFL.

When the EPFO ​​made the investment in 2014-15, the company's debt was rated as & # 39; AAA & # 39; by CARE. Under the rules, the EPFO ​​can not invest in any debt securities rated below "AA +". But pension and insurance funds, such as the EPFO, are not required to have mark-to-market losses.

A few weeks ago, CARE reduced DHFL's debt to "D," or the standard category, citing a late interest payment totaling nearly Rs 1,000 crore.

DHFL has been struggling against a liquidity crisis in the last three quarters following the delinquency in September by the IL & FS financial infrastructure that stifled the flow of funds to the para-banking sector, causing an abnormal increase in the cost of funds to mortgage lenders and not banking.

Since then, DHFL has sold assets and raised money to service about 35,000 to 40,000 rupees of outstanding debt obligations.

At the end of the quarter of December 2018, DHFL was India's third largest domestic lender, with assets under management of Rs 1.3 lakh crore and debt of Rs 90,000 crore.

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