Move casts aspersions upon Rs1.5 lakh-plus cr debt obligations
MUMBAI: Dewan Housing Finance Corporation Ltd (DHFL) has taken strong objection to the multiple-notch rating downgrading of its debt instruments by reputed agencies such as ICRA, CRISIL, CARE Ratings and Brickwork Ratings, and said the company is seeking clarification on the rationale that predicts DHFL’s inability to service pay-outs on the due dates.
The shares of the company has fallen by about 15 per cent due to the rating downgrading that has cast doubts about the company’s ability to honour its debt obligations at a time when NBFCs are being looked down with suspicion.
The leading rating agencies, ICRA and CRISIL downgraded DHFL’s Rs850 crore commercial papers multiple notch from A4 to D, which explicitly indicates probability to default or ‘expected to be in default soon’.
They cited delay in meeting scheduled debt obligations by the company as the reason for the downgrading that seems to have drawn a grim picture about the company’s ability to honour its debt obligations in the future.
Another agency, CARE, also went for a multiple notch downgrading of the company’s debt instruments including subordinated debt, perpetual debt, non-convertible debentures etc, that add up to a whopping amount of more than Rs1 lakh crore due to ‘the recent instance of delay in servicing of obligations with respect to some of the non‐ convertible debentures by the company. Brickwork also downgraded the company’s debt papers amounting to about Rs56,650 crore.
DHFL said in a statement the action by the rating agencies is extremely surprising as the company has been making and continues to make substantial efforts in ensuring no defaults on any bonds, repayment of its financial obligations.
“These actions are unwarranted and the company is seeking clarification on the rationale that predicts DHFL’s inability to service pay‐outs on the due dates. Such speculative rating rationale is not adequate,” the company statement added. Since September 2018, DHFL has repaid close to Rs 40,000 crore of financial obligation. To ensure adequate liquidity to meet the repayments, DHFL also sold its strategic retail assets including Aadhar, Avanse and DHFL Pramerica Asset Managers, according to the company statement.
“The company is committed towards ensuring repayment of all its obligations as well as on-boarding the strategic partner for its business,” it stressed.