UTI MF gets Nov dues for DHFL’s commercial papers
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.