DHFL tanks 15% on credit rating downgrade; stock hits over 5-year low

Shares of Dewan Housing Finance Corporation (DHFL) tanked 15 per cent to Rs 95, hitting an over five-year low on the BSE in early morning trade after rating agencies downgraded its commercial papers (CP), citing delays in debt servicing. The stock was trading at its lowest level since December 23, 2013 on the BSE.

Rating agencies CRISIL and Icra have assigned ‘D’ rating to DHFL’s commercial papers, anticipating a default, while CARE Ratings marked D, or default, the housing finance firm’s all long-term facilities, including public NCDs of Rs 29,000 crore and fixed deposits of Rs 8,940 crore. Brickwork Ratings downgraded debt valued at over Rs 58,000 crore.

This comes a day after the non-bank lender delayed interest payments to investors.

DHFL said the action by the rating agencies was "extremely surprising as the Company has been making & 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 firm said.

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. The company is committed towards ensuring repayment of all its obligations as well as on boarding the strategic partner for its business, it said.