In a written communication to investors Reliance Mutual Fund has said that it has marked down 100 percent on debt securities of Dewan Housing Finance Ltd (DHFL) for which the scheduled maturity was on June 4.
“We have taken 100 percent haircut in securities where the scheduled maturity was 4th June 2019. For all other securities where payments have not fallen due, but are rated Default Grade (D), we have marked down our investments by 75 percent in line with valuation agencies,” Reliance Mutual Fund said in a note to investors.
For the schemes maturing on June 4, Reliance Mutual Fund said,”The company (DHFL) has since repaid its obligations towards maturity related repayments for the ZCB maturing on 04/06/2019 bearing ISIN Number : INE202B07AU7, today i.e. 07/06/2019. For the FMPs which have matured, the same shall be remitted to investors subsequently. “
Further, sources at the fund house confirmed that Reliance Nippon Life AMC (RNAM) has received the payment from DHFL securities and RNAM will pay proportionately to all the unit holders of FMPs maturing on June 6 in the next two working days.
On June 4, DHFL was to pay interest and principal payments to the tune of Rs 1,160 crore to all the bond holders. DHFL was unable to make the payment of principal and interest till end of day (June 6) and asked for a seven-day grace period.
As a result, CRISIL, ICRA and CARE Ratings downgraded their rating on DHFL’s Commercial Paper (CP)/Non-Convertible Debentures (NCD) to “D”, based on delay in debt servicing due to inadequate liquidity, modest capital position and modest earnings.
The rating revision took into account the delay in servicing of obligations with respect to some of the NCDs by DHFL due to prolonged liquidity stress.
Reliance Mutual Fund has total investments of Rs 478.93 crore in debt securities of DHFL. Of which, Rs 339.68 crore is in open-ended schemes and the balance Rs 139.25 crore in close-ended schemes.