Non-banking financial company Dewan Housing Finance Corporation (DHFL) is likely to default on payment of Rs 1,150 crore non-convertible debentures (NCDs) due to liquidity crunch, sources privy to the developments told CNBC-TV18.
However, DHFL is likely to make payment within the 7-day grace period as missed deadline does not constitute default, only a delay, said people familiar with the matter.
"The company is taking all steps necessary and shall ensure that the payment fallen due by way of interest is paid within the above-mentioned Cure Period of seven (7) working day. Hence this is a delay & NOT default. The company is committed towards ensuring repayment of all its obligations within the stimulated timelines," DHFL said in a statement.
"Since September 2018, DHFL has been making substantial efforts in ensuring no delay or defaults on any bonds, repayment of its financial obligations. To ensure adequate liquidity to meet the repayments, DHFL also sold its strategic retail assets including Aadhar, Avanse and DHFL Pramerica Asset Managers," the company said.
"Since September 2018, DHFL has repaid close to Rs 40,000 crores of financial obligations. While DHFL had to stop premature FD withdrawals as a policy, in order to conserve liquidity (as allowed by regulations), the company preferred to uphold customer interest and processed all normal maturity payments as well as all cases of medical exigencies. With regards to NCD repayments, DHFL has fulfilled its payment obligations of Rs 5,416 crores till date," it said.
Last month rating agency Icra had downgraded the company's payouts or pass through certificates (PTCs). Icra downgraded the PTCs issued under six mortgage loan securitisation transactions by DHFL
The rating of these instruments has been downgraded from BBB (SO) to AA -(SO). Icra has revised the rating on the commercial paper worth Rs 850 crore of DHFL from A3+ Watch with Negative Implications to A4 Watch with Negative Implications.
Also, last month Crisil Ratings had downgraded commercial paper worth Rs 850 crore of DHFL driven by weak liquidity condition of the company.