The mutual fund industry emerged the largest investor in corporate debt instruments and bonds of the beleaguered Dewan Housing Finance Corporation ( DHFL).
According to data on AceMF, 265 schemes had exposure to DHFL’s shares and debt instruments with a total investment of Rs 6,161 crore across 26 mutual fund houses, as on June 06.
Related: DHFL crisis: A look at the story so far
DHFL owed Rs 960 crore to mutual funds as interest payment towards its bonds. However, on June 04, the housing finance company missed its deadline to make Rs 1,150 crore payment to all bondholders and informed investors, that the payment would be done within seven days.
Related: DHFL announces delay in consolidated financial results for FY19
Given that such delay warranted mutual funds to mark down the net asset values (NAVs) of DHFL bonds by 75 percent, it led to a 30-40 percent single-day fall in NAV of schemes that invested in DHFL debt papers.
As a result, rating agencies cited the mortgage lender’s deteriorating liquidity condition and downgraded its rating on commercial paper (CP).
“With inadequate liquidity as on date to service debt and visibility very low on timely fund-raising, CRISIL expects the CP to be in default on maturity,” the rating agency said in its statement on the downgrade.
Related: DHFL tanks 15% after rating downgrade; what should investors do?
The stock dropped into double-digit levels for the first time since February 04 and hit an intraday low of Rs 94.90, the lowest since December 2013.
DHFL provides home loan products including loans on homes, residential plots, construction, loan against property (LAP) as also mortgage, non-residential and project loans.
Other upcoming payments for DHFL according to rating agencies:
– Rs 850 crore of outstanding CPs of which Rs 750 crore is due in June 2019. The first CP maturity is on June 07.
– Scheduled aggregate cash outflows including loan repayment and securitisation payouts till July 2019 estimated at Rs 6,200 crore. DHFL estimates collection from loan assets at Rs 2,200 crore per month.