Mumbai: Liquidity-stressed Dewan Housing Finance Corp Ltd (DHFL) has defaulted on part payment of commercial papers (CPs), which were due Tuesday, but insisted that it would repay the balance amount in the “next couple of days”, the company told domestic stock exchanges. CPs worth Rs 3.75 bn which were set to mature Tuesday, of which only Rs 1.50 bn or 40% of total dues were paid Tuesday. The CPs worth Rs 3.50 bn were issued on Jun 25, 2018 at 9% and Rs 250 mn on June 27, 2018 at 9%, as per Cogencis data.
“Commercial papers of aggregate value of Rs 3.75 bn i.e. 40% of the total amount and the balance of Rs 2.25 bn will be paid once the surplus cash flow position improves over the next couple of days” the company said in notice. The latest default on repayments within the same month clouds the mood around Dewan Housing Finance’s attempts to recover from its liquidity problems that is fast turning into a solvency issue, despite portfolio sales and stake sales of its mutual fund joint venture and lending arms. Earlier this month, several rating agencies had downgraded Dewan Housing Finance Corp’s papers to the default rating of’D’. This came after the company defaulted on interest payments of Rs 10 bn on its non-convertible debentures that was due on June 4. However, the company managed to pay the interest within the seven-day grace period.
Most mutual funds had already taken a 100% markdown on their CP investments to the mortgage lender. The company statement tuesday said that they don't differentiate between secured and unsecured creditors in terms of repayment, while mentioning that 12 investors hold the paper that it part defaulted on, without naming them. Dewan Housing is among those housing finance companies hit by the liquidity crisis in the sector following defaults on debt repayments by Infrastructure Leasing & Financial Services Ltd group companies since August. A distress sale of Dewan Housing's commercial papers by a mutual fund in September had sparked off concerns over the company's financials and liquidity position. Tuesday, shares of the company ended 4.13% lower at 75.45 rupees on the National Stock Exchange.
