DHFL Delays Interest Repayment of Over Rs1,000 crore On Bonds Due On 4th June: Reports
Moneylife Digital Team 05 June 2019
Dewan Housing Finance Corp Ltd (DHFL) has missed its interest payment deadline of 4 June 2019 on a set of outstanding bonds owing to fund shortage but may pay the over Rs1,000 crore over next seven days, say media reports. The non-banking finance company (NBFC) has delayed payment of interest to mutual funds and other entities. 
 
Last year in June, the housing finance company had raised about Rs11,000 crore through public issue of bonds. These non-convertible debentures (NCDs) offered investors annual yields of 8.90% to 9.10% across maturities. Interest payment of these bonds was due on 4th June.
 
Quoting sources, a report from the Economic Times says, "UTI Mutual Fund and some private sector lenders, including Axis Bank and IndusInd Bank, were among the investors that bought DHFL debt sold last year. Some individual investors are also said to have invested in these."
 
In a report, CNBCTV18 says DHFL is likely to make payment within the seven days grace period as missed deadline does not constitute default, but only a delay. This report cites a statement issued by DFHL on the delay in repayments.
 
However, the statement quoted by CNBCTV18 is neither available on the company website nor in its regulatory filing. 
 
Quoting the DHFL statement, the report says, "The company is taking all steps necessary and shall ensure that the payment fallen due by way of interest is paid within the above-mentioned Cure Period of seven (7) working day. Hence this is a delay & NOT default. The company is committed towards ensuring repayment of all its obligations within the stimulated timelines".
 
"Since September 2018, DHFL has repaid close to Rs40,000 crore of financial obligations. While DHFL had to stop premature FD withdrawals as a policy, in order to conserve liquidity (as allowed by regulations), the company preferred to uphold customer interest and processed all normal maturity payments as well as all cases of medical exigencies. With regards to NCD repayments, DHFL has fulfilled its payment obligations of Rs5,416 crore till date," the DHFL statement quoted by CNBCTV18 says.
 
According to Economic Times, the delay in payments will require MFs to mark down their net asset values (NAVs) by about 75% in the DHFL instruments in order to avoid any redemption pressure by wealthy investors.
 
Last month, the crisis ridden home finance company has stopped accepting new deposits and premature withdrawals. 
 
“In view of the recent revision in the credit rating of our fixed deposit programme, acceptance of all fresh deposits, as well as renewals, has been put on hold with immediate effect,” read a DHFL e-mail to its customers.
 
Premature withdrawals would be allowed only in cases of medical or financial emergency, the DHFL communication said.
 
DHFL had about Rs8,400 crore of loan repayments and securitisation payouts coming up in the next few weeks. DHFL’s available liquidity in April is pegged at Rs2,775 crore even as the company is seeking to sell more assets. The NBFC also assured its stakeholders that it would honour all upcoming payments and have already repaid Rs30,000 crore since September 2018.
 
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