Housing finance company, DHFL has defaulted on payment of commercial paper. Out of the aggregate amount of Rs. 375 crore, Rs. 150 crores i.e. 40% has been paid on a proportionate basis and the balance amount of Rs. 225 crore shall be paid in next couple of days. The amount was due for payment on June 25.
The stock of the company is expected to open weak in trade today and pull down shares of other housing finance companies as well.
"We wish to further state that since September 2018, the Company has met liability obligations of more than Rs. 41,000 crore. Without any recourse to fresh debt funding, a situation exacerbated by multiple rating downgrades, the Company met all its financial obligations through a combination of internal accruals, sell down of its loan assets and monetisation of non-core assets," the company has said in a release.
Pursuant to the downgrade by rating agencies expecting a default for the Commercial Papers (CP) much before they had fallen due, mutual funds had already taken a 100% markdown on their CP investments.
"However, even post these downgrades, the Company continued to meet its obligations of CP holders and made good a total of Rs. 375 crore of CPs before today. The Company has continued to meet all its obligations on time. DHFL has made proportionate payment towards maturity of the aforesaid Commercial Papers of aggregate value of Rs. 375 crore i.e. 40% of the total amount and the balance of Rs. 225 crore will be paid once the surplus cash flow position improves over the next couple of days," the company said in a release.
Most non banking finance companies are facing liquidity issues and the present default may also push share prices lower of NBFCs, including housing finance companies. In any case the market capitalization of many of these companies has fallen sharply.