DHFL's default can expose Rs 1-trn in borrowing to risk of default: CLSA

CLSA feels asset sales will be key to prevent defaults by DHFL, as expected repayments over the next two months are higher at Rs 6,000 crore versus expected collections of Rs 4,000 crore

The recent default of around Rs 1,000 crore by Dewan Housing Finance (DHFL) on interest payment to its debenture-holders can accentuate a contagion risk and expose Rs 1-trillion in borrowing to risk of default / haircuts, says a recent report by global research and brokerage firm CLSA. 

The development, it says, will have a far-reaching impact on the financial sector with the fortunes of select non-bank finance companies (NBFCs) / housing finance companies (HFC), real estate, housing, auto and small-and-medium enterprises (SMEs) bearing the brunt.

Dewan Housing Finance Company (Dewan HFC), according to CLSA’s estimates, has Rs 1-trillion in borrowing