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DHFL pays Rs 963 crore interest on NCDs after rating drop

FE Bureau
Market participants say that, on June 4, 2019, DHFL had interest and principal payments due to the tune of approximately Rs 1,100 crore to industry players

The beleaguered Dewan Housing Finance (DHFL) on Tuesday said it has paid `961.95 crore of interest payable on secured redeemable non-convertible debentures (NCDs). According to a filing on the exchanges, the mortgage firm said the payments had been made within the cure period of seven working days.

Market participants say that, on June 4, 2019, DHFL had interest and principal payments due to the tune of approximately Rs 1,100 crore to industry players and investors and that the company failed to repay on the scheduled date. Later, several debt mutual funds were compelled to mark-down around 75%-100% of the value of the assets. As per Securities and Exchange Board of India (Sebi) and Reserve Bank of India (RBI) regulations if even one day s principal or interest is delayed, it is effectively a default.

On June 5, 2019, Crisil, Icra and Care had downgraded its rating on the Commercial Paper (CP)/Non-Convertible Debentures (NCD) of DHFL to D , based on delay in debt servicing due to inadequate liquidity, modest capital position and modest earnings.

The rating revision takes into account the recent instance of delay in servicing of obligations with respect to some of the non-convertible debentures by DHFL due to prolonged liquidity stress.

Later on June 8, DHFL said it had repaid dues worth a total `276.05 crore to retail and institutional investors. It paid back `59.74 crore of its total obligations worth `961.95 crore to 35,595 retail investors holding its non-convertible debentures (NCDs) and said it would ensure that the rest would be repaid within seven working days.

Interest payments on NCDs issued on a private placement basis had also fallen due on June 4 and June 6. DHFL said that for the first set of NCDs, on which interest dues are worth `80 crore and the principal amount aggregates `120 crore, it has arranged funds and met its obligations. For the second set, interest aggregating to `16.31 crore were scheduled for June 6.