UTI MF gets Nov dues for DHFL’s com­mer­cial pa­pers

Business Standard - - YOUR MONEY - JASH KRIPLANI

UTI MF has re­ceived pay­ments for com­mer­cial pa­pers (CPs) of De­wan Hous­ing Fi­nance (DHFL) that were ma­tur­ing in November. “We can con­firm that DHFL has pre­paid CPs ma­tur­ing at a later date in November to UTI MF. We can­not pro­vide any fur­ther de­tails as we do not comment on spe­cific in­vest­ment de­ci­sions,” the fund house said.

Ac­cord­ing to peo­ple in the know, as th­ese CPs were not rolled-over, the fund house now doesn’t have ex­po­sure to DHFL CPs in UTI Liq­uid Cash Plan, UTI Money Mar­ket Fund and UTI Trea­sury Ad­van­tage Fund. Ex­perts say that while larger non-bank en­ti­ties are cov­ered for their neart­erm pay­ments, fund­ing for fresh busi­ness may be a chal­lenge for some play­ers. Ex­perts are keeping a close watch on the roll-over rates.

Kr­ish­nan Si­tara­man, se­nior di­rec­tor, CRISIL Rat­ings, said that CP vol­umes have in­creased in the last week of Oc­to­ber and if the trend con­tin­ues, roll-over rates should be higher in November.

Mar­ket par­tic­i­pants say that for now roll-over rates for top tier com­pa­nies (as per­ceived by the mar­ket) is at 50 per cent, while for lower tier com­pa­nies the roll-over rates are un­der 10 per cent.

“Some non-bank­ing fi­nan­cial com­pa­nies (NBFCs) may see their growth slow down due to lack of fund­ing for fresh busi­ness,” a fixed­in­come fund man­ager said, re­quest­ing anonymity.

The CP mar­ket was fac­ing a liq­uid­ity squeeze, fol­low­ing the IL&FS group de­fault in Septem­ber. The cri­sis had put a spot­light on the as­set-li­a­bil­ity mis­match of non-bank lenders (NBFCs, and hous­ing fi­nance com­pa­nies or HFCs).

Re­cent data in­di­cates some eas­ing of the liq­uid­ity. The fort­nightly data re­leased by the Re­serve Bank of In­dia (RBI) showed that the money raised by cor­po­rates and fi­nance com­pa­nies in the CP mar­ket at the end of the fort­night ended Oc­to­ber 31, stood at ~949 bil­lion. The fig­ure was 19 per cent higher com­pared to pre­vi­ous fort­night.

Mar­ket sources say non-bank lenders (NBFCs and HFCs) raised ~300 bil­lion in Oc­to­ber. Al­most half of this, or ~150 bil­lion, was raised in Oc­to­ber-end, al­beit at a higher cost. The spreads had widened by 200 ba­sis points for some NBFCs.

How­ever, fund man­agers say given the risk-per­cep­tion around NBFCs, port­fo­lios of liq­uid schemes and other debto­ri­ented schemes may re-align with in­vestor sen­ti­ment.

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