Dewan Housing Finance Pays ₹838 Crore To NCD Holders

Dewan Housing Finance Corporation (DHFL) has paid ₹838 crore as interest and principal on its non-convertible debentures issued on private placement, laying to rest the fear of another default rocking mutual funds and the debt market.

In a statement issued to the stock exchanges, DHFL said it paid ₹500 crore in principal and ₹338 crore in interest on four NCD series that matured on Tuesday.

Earlier this month, rating agency Crisil had downgraded ₹850 crore worth of commercial paper of the company to ‘A3+’ from ‘A2+’ with negative implications. However, DHFL had contested the rating downgrade.

Crisil said the downgrade was driven by continued low visibility in raising funds and its belief that liquidity levels will remain subdued against earlier expectations.

Expected fund flow from sell-down of project finance loans, high-value securitisation transaction (comprising greater proportion of non-housing loans), and proceeds from stake sale of associate entities are taking longer than expected.

Liquidity remains a critical monitorable due to the limited visibility in fund raising (including securitisation) and the agency’s belief that liquidity will now remain lower than earlier expectations. Liquidity level was at ₹4,000 crore during the second week of April 2019.

Collection from loan assets is estimated at ₹2,200 crore per month.

On the other hand, scheduled monthly cash outflow (including loan repayment and securitisation payouts) over the next two-and-half months remains high at an estimated ₹9,900 crore. Any higher-than-anticipated premature redemption of fixed deposits remains a key rating sensitivity factor.

Additionally, a portion of the NCDs raised by DHFL has triggered acceleration clauses linked to downgrades in the NCDs’ long-term ratings. Any exercise of option by investors would materially increase the scheduled outflow, said the rating agency.