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DHFL’s D-grade stokes fears on bank exposure, index tanks

Jittery markets are facing a crisis of confidence with respect to the precariously perched NBFC.

, ET Bureau|
Updated: Jun 07, 2019, 08.42 AM IST
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After debt-laden mortgage lender Dewan Housing Finance (DHFL) failed to pay on its bonds on Tuesday, net asset values (NAVs) of several debt funds — including those run by top MFs — crashed. On Wednesday, ratings agencies Crisil And ICRA downgraded commercial papers issued by the company. Here’s the lowdown on the latest troubles in the debt fund segment and what can investors do to safeguard their money...
After debt-laden mortgage lender Dewan Housing Finance (DHFL) failed to pay on its bonds on Tuesday, net asset values (NAVs) of several debt funds — including those run by top MFs — crashed. On Wednesday, ratings agencies Crisil And ICRA downgraded commercial papers issued by the company. Here’s the lowdown on the latest troubles in the debt fund segment and what can investors do to safeguard their money...
Mutual fund investors holding debt of Dewan Housing Finance Corporation (DHFL) suffered one of the worst single day losses ever after the troubled housing finance firm delayed interest payments. The net asset values (NAVs) of several debt schemes fell by 6-53 per cent on Tuesday, reflecting the marked-down value of their holdings in DHFL paper. Let’s delve a little deeper and see what led to this crash and where do the investors stand. Have a look.
Mutual fund investors holding debt of Dewan Housing Finance Corporation (DHFL) suffered one of the worst single day losses ever after the troubled housing finance firm delayed interest payments. The net asset values (NAVs) of several debt schemes fell by 6-53 per cent on Tuesday, reflecting the marked-down value of their holdings in DHFL paper. Let’s delve a little deeper and see what led to this crash and where do the investors stand. Have a look.
Nifty Bank index fell 2.32 per cent on Thursday, its biggest single day fall since September 24, 2018, as no specific measures were announced in the central bank’s policy annoucement to provide immediate relief to the much-troubled NBFC sector, said analysts.

The market was disappointed that its expectation of a 50 bps cut in rates was met by the RBI with only a 25 bps cut to the repo rate on Thursday.

Banks funded over Rs 50,000 crore to DHFL. State Bank of India, which has about Rs 8,800 crore exposure to DHFL as on June 2018, fell 4.34 per cent to Rs 337. Bank of Baroda, with an exposure of Rs 4,490, declined 6.33 per cent to Rs 124.20.

DHFL snip 6

CRISIL, ICRA, and CARE have downgraded DHFL’s credit rating to ‘D’ which is default rating. Jittery markets are facing a crisis of confidence with respect to the precariously perched NBFC including housing finance companies & fixed-income mutual fund sectors, said analysts.

How DHFL default grade hurts your mutual fund returns

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Mounting trouble

6 Jun, 2019
After debt-laden mortgage lender Dewan Housing Finance (DHFL) failed to pay on its bonds on Tuesday, net asset values (NAVs) of several debt funds — including those run by top MFs — crashed. On Wednesday, ratings agencies Crisil And ICRA downgraded commercial papers issued by the company. Here’s the lowdown on the latest troubles in the debt fund segment and what can investors do to safeguard their money...
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“The markets reacted negatively today especially after the RBI policy announcement as markets were expecting a lot more – both on the front of a larger rate cut like 50bps or liquidity driven measures upfront and a roadmap for the NBFC crisis that is making headlines daily,” said Rohit Srivastava, fund manager-PMS, Sharekhan by BNP Paribas.

“It leaves the market uncertain for the next one-and-a half months, and hopes were that some announcements would be made today. This led to selling pressure and profitbooking by those who were betting on some big news event after the election of a strong government,” he added.

“Inadequately forceful response to the IL&FS bankruptcy has already created fear psychosis among market participants which is getting compounded by an almost blas e regulator treatment towards other troubled groups like DHFL, Essel, ADAG etc,” said Ajay Bodke, CEO-PMS, Prabhudas Lilladher.

DHFL sneezes and debt funds catch the cold

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Trouble in paradise?

6 Jun, 2019
Mutual fund investors holding debt of Dewan Housing Finance Corporation (DHFL) suffered one of the worst single day losses ever after the troubled housing finance firm delayed interest payments. The net asset values (NAVs) of several debt schemes fell by 6-53 per cent on Tuesday, reflecting the marked-down value of their holdings in DHFL paper. Let’s delve a little deeper and see what led to this crash and where do the investors stand. Have a look.
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