Street to focus on RCap, DHFL’s upcoming repayments of Rs 10.4K crore – Economic Times

Dewan Housing Finance Corp. (DHFL) and
Reliance Capital are due to make repayments of about Rs 10,400 crore on bonds and commercial papers over the next few weeks, putting the spotlight on them amid the liquidity squeeze that has gripped non-banking finance companies (NBFCs).

DHFL has close to Rs 8,400 crore of loan repayments and securitisation payouts coming up in the next eight weeks. With its available liquidity pegged at Rs 2,775 crore in April, DHFL could struggle to make repayments even though it has been seeking to dispose of more assets.

In the next few weeks, Reliance Capital units Reliance Commercial Finance Ltd (RCFL) and Reliance Home Finance Ltd (RHFL) have to repay around Rs 2,000 crore, said people with knowledge of the matter. The two companies have been trying to sell good-quality loan portfolios. Rs 1,059 crore is due in May and Rs 738 crore in June, according to an Icra report.

Reliance Capital had a liquidity cushion of around Rs 48 crore in the form of unencumbered cash and deposits at the end of March 31, as well as estimated inflows of Rs 59 crore in May and Rs 31 crore in June — largely interest repayments on loans and debentures to group companies.

“The amount of repayment for Reliance Capital subsidiaries could be more because, when the credit rating gets downgraded, lenders to the entity can recall their loans as it’s part of the covenant,” said a source.

Reliance Capital is looking to sell stakes in both units to make them self-sufficient in servicing debt and in expanding their businesses.

Reliance Capital’s asset-monetisation plan aims to raise Rs 10,000-12,000 crore over the next three-four months, which will help deleverage up to 70% of outstanding debt.

DHFL and Reliance Capital did not comment on the story.

The liquidity crisis was sparked by the Infrastructure Leasing & Financial Services (IL&FS) default in September last year. Banks became wary of lending to NBFCs that are unable to sell portfolios or regularise their repayments.

Care Ratings has downgraded RCFL’s long-term bank facilities worth Rs 12,700 crore from CARE BBB+ to Care D.

These entities have not been getting bank loans or money from the debt market. Repayments are being serviced by the selling down and receivables of loans. The only way to meet repayment schedules would be through securitisation or equity sales, analysts said.

Crisil downgraded Rs 850 crore worth of commercial paper issued by DHFL due to delays in fund inflows from asset sales and securitisation deals. Almost half a dozen investors have shown interest in buying stakes in DHFL, which has raised Rs 1,375 crore by selling parts of its project finance portfolio to Oaktree Capital Management. It’s looking to reduce its real estate project finance exposure through such transactions and grow the retail book.

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