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Revival signs? DHFL bond yields fall as trading gains traction


Dewan Housing Finance (DHFL) may be struggling to pay its debtors, but a group of overseas funds are betting on the revival of a company that was India’s third-biggest financier of homes at the end of last year.

DHFL bonds worth about Rs 180 crore have changed hands in four deals in the past few days, with yields falling from the record high on June 11, when securities sold a year ago traded at an eye-popping 67 per cent. The decline in yields, to the 39 per cent ballpark, shows that investors are shortening the odds on DHFL’s revival – or a buyout that would honour commitments to existing bondholders.

Funds dealing in distressed assets seem to be the buyers of DHFL debt in the secondary market, said sources.

“Those risk takers are seeking to gain from falling yields,” one of the persons cited above told ET.

On June 20, there were four separate transactions of non-convertible debenture series maturing in 2021 and 2023. A particular series, the largest of the lot, was traded at 38.66 per cent for Rs 120 crore.

British bank Barclays is reportedly one of the buyers in the secondary market. It may have bought those papers from a domestic fund, which wanted to offload the investment, multiple market sources said.

Mutual funds stuck with these bonds are finding an exit route in these deals.

The other deals were relatively smaller – in the range of Rs 10 crore to Rs 25 crore. Those, too, yielded less than the earlier secondary market transaction of Rs 50 crore, at 67 per cent, more than two weeks ago.

DHFL Tuesday managed to meet 40 per cent of its Rs 375-crore repayment commitment toward commercial papers, highlighting the cash-flow stress at the embattled mortgage lender that is selling assets to repay debt.

The company is looking to bring in a strategic equity investor and is in talks with a group of foreign and domestic entities.

Since September last year, the company has repaid Rs 35,000-40,000 crore in debt obligations.

While the company has been generating cash via asset sales, it is also receiving about Rs 2,000 crore in cash through equated monthly installments (EMIs) from its home-loan borrowers.





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