DHFL pays off dues
DHFL pays off dues
Quashing speculation regarding a likely default, Dewan Housing Finance Limited (DHFL) has cleared pending interest dues on bonds that it had sold last year. The company was scheduled to make the interest payment before Eid this year failing which speculation was rife regarding a possible default.
Home financing company DHFL has paid over Rs 850 crore in pending interest to investors on June 11. According to information from people with firsthand knowledge of the payments, the company was able to clear its interest dues after it sealed another deal on loan portfolio sales.
DHFL was scheduled to make the interest payment of a little under Rs 1,000 crore on June 4 on bonds it had sold over a year ago. It was only able to pay Rs 70 to 80 crore of its dues to retail investors in the past week. In a note to stock exchanges, the company confirmed that it had made the full payment toward interest payable on NCDs issued through a public issue in 2018.
The parent company of DHFL – Wadhawan Global Capital – was able to raise Rs 2,200 crore on June 10 from the aforementioned loan portfolio sale. A part of these proceeds was transferred to DHFL which allowed it make the outstanding interest payments.
Takeaway-
Quashing speculation regarding a likely default, Dewan Housing Finance Limited (DHFL) has cleared pending interest dues on bonds that it had sold last year. The company was scheduled to make the interest payment before Eid this year failing which speculation was rife regarding a possible default.
Home financing company DHFL has paid over Rs 850 crore in pending interest to investors on June 11. According to information from people with firsthand knowledge of the payments, the company was able to clear its interest dues after it sealed another deal on loan portfolio sales.
DHFL was scheduled to make the interest payment of a little under Rs 1,000 crore on June 4 on bonds it had sold over a year ago. It was only able to pay Rs 70 to 80 crore of its dues to retail investors in the past week. In a note to stock exchanges, the company confirmed that it had made the full payment toward interest payable on NCDs issued through a public issue in 2018.
The parent company of DHFL – Wadhawan Global Capital – was able to raise Rs 2,200 crore on June 10 from the aforementioned loan portfolio sale. A part of these proceeds was transferred to DHFL which allowed it make the outstanding interest payments.
Takeaway-
- Default on payments by NBFCs in recent times have rocked financial markets and exacerbated the already tight liquidity situation. This payment by DHFL has alleviated a potentially disastrous situation, especially for institutions like Axis Bank, UTI Mutual Fund, and IndusInd Bank, which were among those who had bought DHFL’s NCDs.
- The company is now seeking a revision in its credit rating. Rating majors like CRISIL, ICRA, and CARE have downgraded the rating on the company’s fixed income securities to ‘D’ or the default grade. Though this interest payment is certainly a positive, it is unlikely that the default grade will be revised anytime soon as there is a cooling off period between rating securities as default and any possible upgrade.
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