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Altico bond yields surge to 71% amid concerns

The bonds, bearing a coupon of 12%, yielded 71.34% in a BSE trade worth Rs 375 crore.

, ET Bureau|
Nov 12, 2019, 11.59 PM IST
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The real estate-focused lender, which is seeking to raise Rs 4,000 crore by selling assets, is yet to sew up deals that would generate cash flows and help meet the impending payment obligations.
MUMBAI: Investors appear to be unsure of a quick resolution to the debt problems at Altico Capital, with yields on the non-bank lender’s illiquid bonds surging to 71% in a secondary market trade.

The real estate-focused lender, which is seeking to raise Rs 4,000 crore by selling assets, is yet to sew up deals that would generate cash flows and help meet the impending payment obligations.

The bonds, bearing a coupon of 12%, yielded 71.34% in a BSE trade worth Rs 375 crore.

“A European bank is likely to have bought those papers at a deep discount, and a family office of a wealthy Indian investor, involved in startup businesses, may have sold the bonds,” said a market participant with knowledge of the matter.

Those bonds have a residual maturity of about a year.

Earlier, bonds of Reliance Capital, Dewan Housing Finance Corp, and Vodafone Idea had also surged. Yields on R COM bonds had shot up to 97%, and Vodafone Idea yielded 43%.

Some foreign banks have bought these deep-discount bonds as they see a potential for their revival.

About a month ago, Altico had submitted its resolution plan to lenders. The non-banking finance company had said it would repay creditors in full in a staggered manner over the next five years.

“Bankers are now deliberating over the plan as they have sought time to finalise it. By December, lenders are expected to take a decision,” said an executive involved in the exercise.

Altico’s credit exposure is yet to turn non-performing in banks’ books. The company has about Rs 800 crore repayment liabilities until December. Its total outstanding debt stands at Rs 4,361.5 crore.

In September, Altico defaulted on interest payments of Rs 19.97 crore, causing its liquidity position to worsen.

Mashreq Bank, Yes Bank, and Bank of Baroda are among other lenders in the committee of eight-nine such banks. There are over two dozen lenders that lent to the company, which is backed by Abu Dhabi Investment Authority (ADIA), Clearwater Capital and Varde.
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