Dewan Housing Finance Corporation (DHFL) is raising about Rs 900 crore by issuing Pass Through Certificates (PTCs), or securities used in loan portfolio sales.
The home financier, which will likely sell builder loans, has extended an additional credit support of Rs 1,100 crore against the proposed securitised portfolio. DHFL has obtained ratings for the PTCs.
The selected pool consists of two corporate loans pertaining to ‘Amarylis Realtors LLP (ARL) and Gulmarg Realtors LLP (GRL) originated by DHFL, said Brickwork, a rating company.
The loans have an original tenure of 72 months, including a principal moratorium period of four years, The underlying loans service the interest on a quarterly basis.
The financing structure works like this: Out of total monthly repayments, the buyers of portfolios would receive their share first. The rest will go to DHFL. If the builders whose loans are up for sale fail to repay, potential losses would be borne by DHFL up to the limit of credit enhancement.
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The rating company has rated those PTCs triple-B (SO) with stable outlook. SO or structured obligation is a kind of additional credit support. “The company seems to have approached select private banks,” an executive with direct knowledge of the matter told ET.
The home financier Tuesday failed to pay due interest of about Rs 1,000 crore on a select series of bonds sold an year ago.
Other rating companies, including CRISIL, ICRA and CARE, have downgraded DHFL debt securities to ‘D’ or default category.
DHFL sneezes and debt funds catch the cold
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Mutual fund investors holding debt of Dewan Housing Finance Corporation (DHFL) suffered one of the worst single day losses ever after the troubled housing finance firm delayed interest payments. The net asset values (NAVs) of several debt schemes fell by 6-53 per cent on Tuesday, reflecting the marked-down value of their holdings in DHFL paper. Let’s delve a little deeper and see what led to this crash and where do the investors stand. Have a look.
Mutual fund investors holding debt of Dewan Housing Finance Corporation (DHFL) suffered one of the worst single day losses ever after the troubled housing finance firm delayed interest payments. The ..
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DHFL’s woes began in late September after DSP Mutual Fund sold a portion of the housing finance firm’s securities at a higher yield. The transaction, along with the fiasco involving Infrastructure Leasing & Financial Services, triggered worries that DHFL could be facing liquidity issues. The worries soon spread to other non-banking financial companies (NBFCs), especially housing finance firms.
DHFL’s woes began in late September after DSP Mutual Fund sold a portion of the housing finance firm’s securities at a higher yield. The transaction, along with the fiasco involving Infrastructure Le..
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DHFL Pramerica Medium Term Fund, with assets of Rs 35 crore, saw its NAV plunge 52.99 per cent. The fund has the highest holding of DHFL paper at 37.42 per cent. Another scheme, DHFL Pramerica Floating Rate Fund — with assets of Rs 13 crore — saw its NAV plummet 48.4 per cent, with one-year returns dipping to 44.2 per cent. Tata Corporate Bond, which has assets of Rs 184 crore, saw its NAV fall 29.7 per cent, with one-year return at a negative 30.16 per cent. As many as 10 debt schemes saw their NAVs erode by more than 10 per cent on Tuesday.
A loss of 53 per cent in NAV would mean an erosion of 5-6 years of scheme returns. Investors earn 8-9 per cent in a year in debt schemes.
DHFL Pramerica Medium Term Fund, with assets of Rs 35 crore, saw its NAV plunge 52.99 per cent. The fund has the highest holding of DHFL paper at 37.42 per cent. Another scheme, DHFL Pramerica Floati..
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About 22 mutual funds together owned DHFL paper worth Rs 5,236 crore across 163 debt schemes as on April 30, 2019, as per data from Value Research. UTI Mutual Fund and Reliance Nippon Asset Management are among the largest fund houses holding DHFL paper. In 10 schemes, the holding of DHFL paper has crossed the single-issuer exposure limit of 10 per cent mandated by the Securities and Exchange Board of India. Wealth managers believe existing investors should stay put for now in schemes with exposure to DHFL.
About 22 mutual funds together owned DHFL paper worth Rs 5,236 crore across 163 debt schemes as on April 30, 2019, as per data from Value Research. UTI Mutual Fund and Reliance Nippon Asset Managemen..
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Meanwhile, DHFL’s parent Wadhawan Global has been selling businesses in the past few months to meet debt obligations. It sold Aadhar Housing Finance to private equity firm Blackstone earlier this year, and Avanse Financial Services to Warburg Pincus. The financial services group is also looking to sell its stake in the life insurance joint venture with US-based Prudential Financial. According to the sourcesThe Reserve Bank of India is said to have approved the proposed selling of the DHFL group company
Meanwhile, DHFL’s parent Wadhawan Global has been selling businesses in the past few months to meet debt obligations. It sold Aadhar Housing Finance to private equity firm Blackstone earlier this yea..
Both ARL and GRL derive their lineage and legacy from the Sahana Group of companies.
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“The scope of work includes supervising, monitoring and co-ordinating related activities from engineering designs to construction," Brickwork said.
Since the NBFC liquidity crisis became pronounced in September, DHFL has sold retail loans worth Rs 30,000 crore via securitisation. During this period, the home financier has paid about Rs 40,000 crore of financial obligations.
