DHFL defaults again on commercial papers repayment
Out of the aggregate amount of Rs 375 cr, DHFL failed to make payments worth Rs 225 cr.
"Out of the aggregate amount of Rs 375 crore, 40% has been paid on a proportionate basis, and the balance amount of Rs 225 crore shall be paid in the next couple of days," DHFL said in a statement late Tuesday.
A particular asset sale money did not arrive on time leading to cash shortage, said a source.
Earlier this month, just before the Eid festival, DHFL failed to meet payment obligations. At that time, the company failed to pay due interest on bonds sold last year, and later paid the money within the grace period to avoid the 'default' tag.
Mid-sized mutual funds, some of which are linked to select banks or large conglomerates, invested in the short-term debt papers that came up for repayment Tuesday, market sources told ET. There were a dozen investors in these instruments.
On June 17, ET reported that the Employees' Provident Fund Organisation (EPFO) had sought details of DHFL's plans for cash generation amid mounting concerns of default. The largest domestic institutional investor in debt assets sought to redeem half of its DHFL investments exercising the ‘put option’, an exit route given to investors before scheduled maturities.
EPFO invested about Rs 1,300 crore in debt securities sold by DHFL.
When EPFO made the investment in 2014-15, the company’s debt was rated ‘AAA’ by CARE. As per rules, EPFO cannot invest in any debt securities rated below ‘AA+’. But pension and insurance funds such as EPFO are not required to show mark-to-market losses.
A few weeks ago, CAREdowngraded DHFL’s debt to ‘D’, or the default category, citing a delay in the payment of interest totalling nearly Rs 1,000 crore.
DHFL has been battling a liquidity crisis over the past three quarters after defaults in September by infrastructure financier IL&FS choked fund flows to the para-banking sector, causing an abnormal increase in the cost of funds for mortgage lenders and non-bank financiers.
Since then, DHFL has sold assets and raised cash to meet about Rs 35,000-40,000 crore of outstanding debt obligations.
At the end of the December 2018 quarter, DHFL was India’s third-largest home financier, with assets under management of Rs 1.3 lakh crore and debt of Rs 90,000 crore.