DHFL, a non-banking finance company focused on housing finance, has reportedly missed interest payments of ₹960 crore. It is not clear if the delay was to debt owed to mutual funds, however it has affected all debt issued by the company due to valuation norms that require funds to take write-downs on the occurrence of such an event. The missed payment follows multiple downgrades of DHFL’s debt. On 14th May, CARE Ratings downgraded DHFL borrowings worth a huge ₹1.13 trillion, just three days after rating agency CRISIL downgraded commercial papers issued by DHFL worth ₹850 crore on 11 May. Sources indicated that mutual funds have taken write-downs as per the valuations provided by independent valuation agencies. In this case of DHFL, the write down has been 75% of the value of assets. However if the instrument was unsecured, the write down is 100% of assets. DHFL has indicated that there is a 7 day grace period that allows the company to rectify the delay in payments.
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