Dewan Housing Finance (DHFL) Tuesday managed to meet 40% of its Rs 375-crore repayment commitment toward commercial papers, highlighting the cash-flow stress at the embattled mortgage lender that is selling assets to repay debt.
"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 companys 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 DHFLs debt to D, or the default category, citiRead More – Source