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 Name Exposure (%) Scheme Name Exposure (%)
DHFL Pramerica Medium Term Fund 37.42 Tata FMP – Series 55 – Scheme E 7.97
DHFL Pramerica Floating Rate Fund 31.94 Aditya Birla Sun Life FTP – Series QQ 7.94
DHFL Pramerica Short Maturity Fund 30.47 UTI FTIF – Series XXIV – Plan 17 7.89
Tata Corporate Bond Fund 28.21 Reliance FHF 31 – Series 6 7.88
JM Equity Hybrid Fund 24.61 UTI FTIF – Series XXIV – Plan 13 7.88
Baroda Treasury Advantage Fund 21.16 UTI FTIF – Series XXV – Plan 2 7.85
DHFL Pramerica Low Duration Fund 20.12 Edelweiss FMP – Series 41 7.82
Principal Low Duration Fund 19.24 Reliance FHF 31 – Series 11 7.78
JM Low Duration Fund 18.96 Union Corporate Bond Fund 7.73
Edelweiss Corporate Bond Fund 15.00 Edelweiss FMP – Series 49 7.53
BNP Paribas Medium Term Fund 14.84 UTI Dual Advantage FTF – Series III – II 7.52
Tata Medium Term Fund 14.60 Axis Hybrid Fund – Series 31 7.48
JM Income 13.15 UTI FTIF – Series XXV – Plan 8 7.46
Baroda Dynamic Bond Fund 12.97 DHFL Pramerica Dual Advantage Fund 7.38
BNP Paribas Corporate Bond Fund 12.39 UTI Dual Advantage FTF – Series II – I 7.35
Edelweiss Short Term Fund 12.16 Axis Regular Saver Fund 7.34
Reliance Fixed Horizon Fund 29 – Series 18 10.39 Aditya Birla Sun Life FTP – Series QH 7.31
Reliance Fixed Horizon Fund 30 – Series 3 10.26 JM Short Term Fund 7.26
UTI Dual Advantage FTF – Series II  – II 10.25 Reliance FHF 30 – Series 11 7.25
HSBC Short Duration Fund 10.24 LIC MF Savings Fund 7.24
HSBC FTS 134 10.18 Reliance FHF 30 – Series 8 7.21
HSBC FTS 135 10.15 Franklin India Corporate Debt Fund 7.11
UTI FTIF – Series XXIX – Plan 9 9.82 JM Ultra Short Duration Fund 7.06
UTI FTIF – Series XXIX – Plan 11 9.79 UTI FTIF – Series XXV – Plan 3 7.02
Principal Dynamic Bond Fund 9.79 Axis Hybrid Fund – Series 32 7.01
IDBI Credit Risk Fund 9.54 UTI Treasury Advantage Fund 6.78
Reliance Prime Debt Fund 9.44 Sundaram Short Term Debt Fund 6.74
Reliance FHF 30 – Series 14 9.44 Axis Hybrid Fund – Series 35 6.74
HSBC Low Duration Fund 9.35 Reliance Low Duration Fund 6.69
Sundaram Short Term Credit Risk Fund 9.22 UTI FTIF – Series XXIX – Plan 5 6.59
DHFL Pramerica FDF – Series BE 9.15 UTI Bond Fund 6.57
Aditya Birla Sun Life FTP – Series OW 8.95 Sundaram Low Duration Fund 6.55
HSBC FTS 136 8.92 Reliance FHF 24 – Series 2 6.50
Principal Credit Risk Fund 8.86 Reliance FHF 30 – Series 18 6.49
IDBI Ultra Short Term Fund 8.70 Franklin India FMP – Series 4 – Plan D 6.39
DHFL Pramerica FDF – Series AZ 8.67 UTI Fixed Income Interval Fund – Annual 6.39
Reliance Fixed Horizon Fund XXXII – Series 10 8.58 Axis FTP – Series 97 (1116 days) 6.31
Aditya Birla Sun Life FTP – Series QP 8.53 Aditya Birla Sun Life FTP – Series QW 6.24
UTI FTIF – Series XXV – Plan 6 8.49 UTI Dual Advantage FTF – Series II – V 6.24
Axis FTP – Series 96 (1124 Days) 8.47 UTI Dual Advantage FTF – Series III – I 6.14
UTI FTIF – Series XXIX – Plan 3 8.46 Principal Corporate Bond Fund 5.99
DHFL Pramerica FDF – Series AF 8.40 Sundaram Debit Oriented Hybrid Fund 5.94
UTI Short Term Income Fund 8.39 UTI Dynamic Bond Fund 5.90
Axis Hybrid Fund – Series 33 8.25 Axis Corporate Debt Fund 5.62
UTI Fixed Term Income Fund – Series XXV – IX 8.19 IDBI Short Term Bond Fund 5.56
Reliance Fixed Horizon Fund XXXV – Series 16 8.18 BNP Paribas Short Term Fund 5.44
Reliance Fixed Horizon Fund XXXV – Series 5 8.16 Aditya Birla Sun Life FTP – Series QC 5.39
Tata Fixed Maturity Plan Series 55 Scheme F 8.13 DSP Bond Fund 5.23
UTI FTIF – Series XXIV – Plan 15 7.97 DSP Strategic Bond Fund 5.17

 

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