ValuePickr Forum

Dewan Housing Finance Limited

Would you mind explaining how you put yes bank in the same situation as Jet, ADAG, DHFL ?

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Where is the evidence of this? There are 0 facts to support this, and just unsubstantiated rumours by ‘people familiar with the development’. I would not say these rumours should be worth nothing, but they should still be discounted appropriately.

What I have heard from friends in Bombay is that DHFL still has a few more humps to cross before they have ‘excess’ liquidity that can be used to pay back new debt. Once they reach this stage, the lending business can start to rev up again and this current downward cycle will reverse.

DHFL selling loans doesn’t mean they sell off loans & left with nothing.
DHFL has been selling loans by securitization by which they get commission for collecting interest from borrowers.They can use the fresh cash raised to lend again or meet liabilities.
Btw many NBFCs have been raising cash by selling loans through securitization since Sept 18, markets haven’t perceived it to be negative in current tight liquidity scenario to keep the business running & meeting liabilities

Yes bank management credibility was very much a question mark, not above board. Mr RT wanted to be immortal Head Of Bank, against the rules. DHFL management also not above board, although now they are being forced to exit - Just like RT was forced by RBI to exit.

Yes bank results of this quarter “may just be” the beginning of several more such quarters, in the name of cleaning the books. Same will be the case of DHFL with disbursals zero and selling of assets to meet the payment schedule (like ADAG). There is fair chance that they will have to sell at discount to actual value as they need funds and buyer will dictate terms.

It will be great if yes bank saga ends here. But no one knows, it’s a black box now.

Update


also outcome of recent board meeting

There can be additional pressure on the scrip because of the following

for additional information on commercial papers one can refer to
https://rbi.org.in/Scripts/FAQView.aspx?Id=25
https://www.sapling.com/8550180/advantages-disadvantages-commercial-paper

Disc : presently holding the shares of the company .this is not any Buy or sell recommendation .i may buy /add or sell The shares without informing the forum .Individual must Consult consultant or do their own research before investing

Hi,

Thanks for the link , It was very detailed and simple.
Does commercial paper also trade on Exchange? Any other place one can see the CMP?

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i found the good website regarding this and it actually has the methodology how they do valuation of CP and Bonds
http://fimmda.org/modules/content/?p=1029

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If anyone here has paid access to moneylife, request you to kindly share a brief summary of the following article

https://www.moneylife.in/article/dhfls-imminent-default-i-a-rapidly-unravelling-crisis/57184.html

I do and I read the article.

It says that while DHFL had top notch rating till Feb 2019, and since then every month it has been downgraded one notch by Crisil on short tem issuances, and now in the last few days it has been downgraded on all its issuances, including securitised loans, by all 3 major rating agencies - Crisil, CARE and ICRA. The total downgrades are upto 3 notches to BBB- and also on FDs and Bank loans

DHFL for its part says that its collection efficiency has been consistently good, and it has repaid ₹ 30,000 cr since Sept 2018.

Crisil notes that among its reasons, lower than expected liquidity available because of delays in selling its existing loans, and securitisation was not done as much to help liquidity. The NCDs have accelerated repayment clause that can further worsen the liquidity situation. Besides DHFL has had more liability than expected.

Further raising new funds is slower than expected. The other rating agencies more or less say the same, albeit a tad more lenient, per my reading.

ML argues that all this makes default more imminent.

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Dead cat bounce of DHFL
There it is.The spasms before it dies.
Long overdue. Twitterati is debating whatever is happening.

DHFL Stops Fresh Deposits, Puts Premature Withdrawals On Hold Temporarily

Read more at: https://www.bloombergquint.com/economy-finance/dhfl-stops-fresh-deposits-puts-premature-withdrawals-on-hold-temporarily
Copyright © BloombergQuint

News Share…

Stopping fresh FD & premature withdrawal is seen as a good move by MFs

Clarification given by DHFL that fresh deposits cannot be taken because of NHB guideline that companies below AA- cannot take fresh deposits408BF59B_7249_44B4_B0B1_3A90B6600593_135643.pdf (450.3 KB)

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If there are two lenders, say A and B, to a stressed borrower who says he is going to stop repaying A for the moment, will B see it as a good move or a bad move?

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The Stressed borrower has agreed to repay lender A at the end of the maturity period and also agreed to pay on a prematured date in case of emergency (as per Bloomberg news).
Prematured withdrawals will be a blow to the already stressed borrower’s ALM & the company will not be able to make liquidity availability since the withdrawals could be very random.
Lender B should be happy to get back his dues on date, without Lender A forcing the stressed borrower to repay him back earlier than the maturity date.
As per NHB norms,the stressed borrower cannot renew the deposit ,but to pay back Lender A at the time of maturity.

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Prof Bakshi wrote a wonderful post a couple days ago that is a useful model to me.

If a borrower is stressed it means he cannot pay A + B, because he has less than A + B. Asking A to wait means A should be worried that he will not have his share and B will be happy he will be paid before A. Everything else, like I will pay you if you are really in an emergency (what does that even mean - it is DHFL which is in an emergency) and I will pay you on maturity when the agreement would have allowed for premature withdrawal, is fakery. And to say I cannot accept new deposits (which is same as renewing), giving the impression that people are queuing up to renew my A4 rated deposit and I am reluctantly turning them away because NHB is coming in the way is the PR agency messaging delivering for its fees.

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Stopping acceptance and renewal of Fixed deposits is ok,means they dont want new money however are they allowing for premature withdrawal or closure of existing FDs? If they are allowing it, then they have liquidity for at least existing FDs and on the other hand , if they are not allowing premature withdrawal then the issue is surely there…Their clarification only talks about stopping of acceptance and renewal of FDs and nothing on the premature withdrawal of the existing FD.
Can anyone please clarify on situation on premature closure of existing FDs?

#diffsoft
It is not just A and B but the entire family of FD holders who will panick.They will be wondering if they will be paid on time. With no fresh FDs a major source of funding is closed and add to that repayment to be made to existing FD holders and the shortening of credit by business creditors like a housekeeping provider,vehicle financier etc all will tighten the screw and that is where the company will collapse.
When it collapses god knows how many banks, mutual funds etc.will take a hit.
There is very little possibility of DHFL surviving this crisis unless there is a liberal White Knight or the shareholders agreeing to a sharp haircut of the equity.

DHFL shareholders seeing losses is one thing, and unrelated debt MF investors taking a hit is another thing. Many of them don’t know why their fund’s NAV is falling down and what did they do that they had to take a loss. It was Amtec Auto a few years back, then it was Ballarpur Industries a couple of year back, next IL&FS, Essel, and now this.

Necessary evil, if you are looking for an extra buck or want to pay less tax.

Article Share
https://advisor.moneylife.in/blog/mutual-funds/article/dhfl-scheme-mergers-can-cause-heavy-losses/3127.html