Dewan Housing Finance Corp. Ltd (DHFL) a non-banking finance company concentrated on housing finance has missed its 4th June deadline to pay interest on non-convertible debentures. Moreover, DHFL has also suffered multiple downgrades on its debt instruments. On 11th May, CRISIL downgraded commercial papers worth INR 850 crore issued by DHFL. Three days later, Care ratings downgraded DHFL’s borrowings worth INR 1.13 trillion. The write-down has been 75% of the asset value in case of secured instruments and 100% in case of unsecured instruments.

An important point to note is that the Debenture Trust Deed states that if the payment of interest is not made on the due date, there is a seven day grace period. Post which if the payment still remains unpaid, only then will it constitute as an event of default. DHFL has told investors that they will receive their money within the seven day period.

DHFL debt instruments are exposed to 165 schemes as of 30th April 2019 cumulatively amounting to INR 5,336 crore over 24 AMCs. 106 of the 165 schemes are exposed to over 5% of assets, which gives us an idea of how significant a missed payment is for the majority of the funds listed. Looking at the exposure, some of the most highly exposed funds are DHFL Pramerica Medium Term Fund, DHFL Pramerica Floating Rate Fund, DHFL Pramerica Short Maturity Fund, Tata Corporate Bond Fund, and JM Equity Hybrid Fund. The NAV is also likely to be affected as banks are turning wary of further lending and purchasing of a pool of assets of DHFL.

DHFL has been facing a major cash crunch due to IL&FS defaulting on certain payment obligations. DHFL has been attempting to sell down home loan portfolios at a negotiated price and has managed to sell retail loans amounting to INR 30,000 crore through securitization. They have also sold several assets to raise funds for repayment such as Aadhar housing and Avanse. Nearly INR 40,000 crores of financial obligation have been paid off since September 2018.

Advisor’s Recommendation

Investors who have funds in their portfolio with more than 10% exposure should move to better funds taking into a consideration time period and goals. Investors who have funds having exposure between 5% – 10% should closely monitor the events happening DHFL and start reducing their exposure as well.

If you have investments in any one of these funds and would like to get your portfolio restructured, schedule a call with one of our SEBI registered financial advisors.

List of Funds with more than 5% exposure

Scheme NameExposure (%)Scheme NameExposure (%)
DHFL Pramerica Medium Term Fund37.42Tata FMP – Series 55 – Scheme E7.97
DHFL Pramerica Floating Rate Fund31.94Aditya Birla Sun Life FTP – Series QQ7.94
DHFL Pramerica Short Maturity Fund30.47UTI FTIF – Series XXIV – Plan 177.89
Tata Corporate Bond Fund28.21Reliance FHF 31 – Series 67.88
JM Equity Hybrid Fund24.61UTI FTIF – Series XXIV – Plan 137.88
Baroda Treasury Advantage Fund21.16UTI FTIF – Series XXV – Plan 27.85
DHFL Pramerica Low Duration Fund20.12Edelweiss FMP – Series 417.82
Principal Low Duration Fund19.24Reliance FHF 31 – Series 117.78
JM Low Duration Fund18.96Union Corporate Bond Fund7.73
Edelweiss Corporate Bond Fund15.00Edelweiss FMP – Series 497.53
BNP Paribas Medium Term Fund14.84UTI Dual Advantage FTF – Series III – II7.52
Tata Medium Term Fund14.60Axis Hybrid Fund – Series 317.48
JM Income13.15UTI FTIF – Series XXV – Plan 87.46
Baroda Dynamic Bond Fund12.97DHFL Pramerica Dual Advantage Fund7.38
BNP Paribas Corporate Bond Fund12.39UTI Dual Advantage FTF – Series II – I7.35
Edelweiss Short Term Fund12.16Axis Regular Saver Fund7.34
Reliance Fixed Horizon Fund 29 – Series 1810.39Aditya Birla Sun Life FTP – Series QH7.31
Reliance Fixed Horizon Fund 30 – Series 310.26JM Short Term Fund7.26
UTI Dual Advantage FTF – Series II  – II10.25Reliance FHF 30 – Series 117.25
HSBC Short Duration Fund10.24LIC MF Savings Fund7.24
HSBC FTS 13410.18Reliance FHF 30 – Series 87.21
HSBC FTS 13510.15Franklin India Corporate Debt Fund7.11
UTI FTIF – Series XXIX – Plan 99.82JM Ultra Short Duration Fund7.06
UTI FTIF – Series XXIX – Plan 119.79UTI FTIF – Series XXV – Plan 37.02
Principal Dynamic Bond Fund9.79Axis Hybrid Fund – Series 327.01
IDBI Credit Risk Fund9.54UTI Treasury Advantage Fund6.78
Reliance Prime Debt Fund9.44Sundaram Short Term Debt Fund6.74
Reliance FHF 30 – Series 149.44Axis Hybrid Fund – Series 356.74
HSBC Low Duration Fund9.35Reliance Low Duration Fund6.69
Sundaram Short Term Credit Risk Fund9.22UTI FTIF – Series XXIX – Plan 56.59
DHFL Pramerica FDF – Series BE9.15UTI Bond Fund6.57
Aditya Birla Sun Life FTP – Series OW8.95Sundaram Low Duration Fund6.55
HSBC FTS 1368.92Reliance FHF 24 – Series 26.50
Principal Credit Risk Fund8.86Reliance FHF 30 – Series 186.49
IDBI Ultra Short Term Fund8.70Franklin India FMP – Series 4 – Plan D6.39
DHFL Pramerica FDF – Series AZ8.67UTI Fixed Income Interval Fund – Annual6.39
Reliance Fixed Horizon Fund XXXII – Series 108.58Axis FTP – Series 97 (1116 days)6.31
Aditya Birla Sun Life FTP – Series QP8.53Aditya Birla Sun Life FTP – Series QW6.24
UTI FTIF – Series XXV – Plan 68.49UTI Dual Advantage FTF – Series II – V6.24
Axis FTP – Series 96 (1124 Days)8.47UTI Dual Advantage FTF – Series III – I6.14
UTI FTIF – Series XXIX – Plan 38.46Principal Corporate Bond Fund5.99
DHFL Pramerica FDF – Series AF8.40Sundaram Debit Oriented Hybrid Fund5.94
UTI Short Term Income Fund8.39UTI Dynamic Bond Fund5.90
Axis Hybrid Fund – Series 338.25Axis Corporate Debt Fund5.62
UTI Fixed Term Income Fund – Series XXV – IX8.19IDBI Short Term Bond Fund5.56
Reliance Fixed Horizon Fund XXXV – Series 168.18BNP Paribas Short Term Fund5.44
Reliance Fixed Horizon Fund XXXV – Series 58.16Aditya Birla Sun Life FTP – Series QC5.39
Tata Fixed Maturity Plan Series 55 Scheme F8.13DSP Bond Fund5.23
UTI FTIF – Series XXIV – Plan 157.97DSP Strategic Bond Fund5.17