On Friday, 21st September 2018, around noon, shares of Dewan Housing Finance Ltd. (DHFL) started crashing at an alarming rate and after going down by as much as 60% closed the day with a loss of 42%. The markets which were already under pressure on account of IL&FS debt downgrade,  panicked as news came out that  on the earlier trading day DSP Mutual fund sold 300 crore of DHFL CP (Commercial Paper) at a yield of  11% which was considered high for a AAA rated company like DHFL.  This was coupled with rumors that DHFL rating had been downgraded, even rumors of default by DHFL and reports that it may be holding investments in troubled IL&FS. Incidentally DSP Mutual funds held considerable position in IL&FS in its various schemes and its selling DHFL shares at a higher yield was construed as signs of weakness by investors in DHFL counter as well and effects were also visible in trading in DHFL NCDs at higher yields in the Debt market. While it was anticipated  by market that the cost of borrowing for HFCs and NBFCs is likely to go up and they may face challenge in raising money in the light of recent news on IL&FS, the reaction was quite knee jerk.




The management immediately came out with denial of any default or exposure to IL&FS and stated that it had enough liquidity of Rs. 10000 crore to meet all its obligations till March 2019. The stock has however continued to be under pressure despite such assurances  along with similar movements in stocks of other HFCs like Indiabulls housing Finance, PNB Housing Finance etc. and a large number of NBFC’s including Edelweiss, Magna Finance, Cholamandalam, Shriram Transport etc. There have been concerns on high leverage of DHFL (10 times equity) compared to other Strong HFCs and concerns about  short term Asset Liability mismatch. Further Fixed Deposits by DHFL are in range of Rs. 10000 crore and these may also face some pressure from Fixed Deposit holders due to considerable negative publicity on account of sudden slump in shares. On the +ve side DHFL has demonstrated some steps to fight back which include the company buying back about 500 crore of NCD prematurely. These were mostly 11% NCDs issued in 2014 and were to mature in June, 2019. After the fateful event the rating agencies has reconfirmed AAA rating and further Crisil on 27th Sept, 2018 has reconfirmed its “A1+” rating on 15000 crore CP of the company. Apart from the share price, ability of DHFL to raise money from market after present turmoil and at what rates may have an important bearing on how effectively it can emerge from this situation.

DHFL NCDs have been on a downward spiral in the retail NCD market in this period. However volumes in Retail NCD markets are low and hence in this post we see depicting how DHFL NCDs have traded in the secondary wholesale Debt marketIt is bit early to reach any conclusions based on above, but discerning investors may be able to draw inferences as we cover the time period from the day just before the start of this event till date (3/10/18)  and shall update it for few more days from now.

DHFL: Recent Deals in Secondary Debt Market 
Date
Security
ISIN
Coupon
Maturity
av. Price
Yield %
Turnover
( Lacs)
4-Oct-18DEWAN HOUSING INE202B07HQ09.116-Aug-1998.610910.72380
Total All NCDs390391Lacs% DHFL/TOT0.02%Tot DHFL NCD80Lacs
3-Oct-18DEWAN HOUSING INE202B07IU07.5510-Apr-1999.578.5504200NSE
Total All NCDs480964Lacs% DHFL/TOT0.04%Tot DHFL NCD200Lacs
1-Oct-18DEWAN HOUSING INE202B07IY28.904-Jun-2196.873310.246422500BSE
Total All NCDs564465Lacs% DHFL/TOT3.99%Tot DHFL NCD22500Lacs
28-Sep-18DEWAN HOUSING INE202B07HQ09.116-Aug-1998.587210.754200NSE
28-Sep-18DEWAN HOUSING INE202B07IU07.5510-Apr-1998.542110.43516580NSE
28-Sep-18DEWAN HOUSING INE202B07IY28.904-Jun-2196.8610.2459000BSE
28-Sep-18DEWAN HOUSING INE202B07IY28.904-Jun-2196.981710.190410500NSE
28-Sep-18DEWAN HOUSING INE202B07JA0004-Jun-2398.39.44500NSE
28-Sep-18DEWAN HOUSING INE202B07JC68.904-Jun-2897.11359.34745500NSE
28-Sep-18DEWAN HOUSING INE202B07JD4004-Jun-2898.89.18500NSE
28-Sep-18Dewan Housing INE202B0876912.0531-Dec-99102.585612.022920BSE
Total All NCDs569874Lacs% DHFL/TOT6.46%Tot DHFL NCD36800Lacs
27-Sep-18DEWAN HOUSING INE202B07654012-Sep-19101.342810.05816300NSE
27-Sep-18DEWAN HOUSING INE202B07AU7004-Jun-19155.9819108500NSE
27-Sep-18DEWAN HOUSING INE202B07AV5004-Jun-19155.98191019500NSE
27-Sep-18DEWAN HOUSING INE202B07IJ39.0509-Sep-1999.009610.152800NSE
27-Sep-18DEWAN HOUSING INE202B07IY28.904-Jun-2198.34659.58445NSE
27-Sep-18DEWAN HOUSING INE202B07JA0904-Jun-2395.0910.3414654BSE
27-Sep-18DEWAN HOUSING INE202B07JA0004-Jun-2397.64479.611950NSE
27-Sep-18DEWAN HOUSING INE202B07JC68.904-Jun-2895.23439.6552600NSE
Total All NCDs830724Lacs% DHFL/TOT8.04%Tot DHFL NCD66749Lacs
26-Sep-18DEWAN HOUSING INE202B07IY28.904-Jun-2198.3559.57492500NSE
26-Sep-18DEWAN HOUSING INE202B07IZ98.904-Jun-2397.94679.55000NSE
26-Sep-18DEWAN HOUSING INE202B07JA0904-Jun-2395.06510.3529308BSE
26-Sep-18DEWAN HOUSING INE202B07JA0004-Jun-2395.0610.35776.5NSE
Total All NCDs659900Lacs% DHFL/TOT5.70%Tot DHFL NCD37584.5Lacs
ExchangeISINSecurity DescriptionCouponMaturityWt. av. PriceYield
%
Turnover
( Lacs)
25-Sep-18DEWAN HOUSING INE202B07AY910.710-Jun-21101.729.891000NSE
25-Sep-18DEWAN HOUSING INE202B07IU07.5510-Apr-1998.641910.42510000NSE
25-Sep-18DEWAN HOUSING INE202B07IY28.904-Jun-2199.32139.1510BSE
25-Sep-18DEWAN HOUSING INE202B07IY28.904-Jun-2198.01619.72785700NSE
Total All NCDs781100Lacs% DHFL/TOT2.14%Tot DHFL NCD16710Lacs
24-Sep-18DEWAN HOUSING INE202B07AY910.710-Jun-21101.79.91000NSE
24-Sep-18DEWAN HOUSING INE202B07IY28.904-Jun-2198.34819.5810000NSE
Total All NCDs587400Lacs% DHFL/TOT1.87%Tot DHFL NCD11000Lacs
21-Sep-18DEWAN HOUSING INE202B07AV5004-Jun-19154.8582112500NSE
21-Sep-18DEWAN HOUSING INE202B07AY910.710-Jun-21102.639.51000NSE
21-Sep-18DEWAN HOUSING INE202B07HQ09.116-Aug-1998.945710.28689500NSE
21-Sep-18DEWAN HOUSING INE202B07IJ39.0509-Sep-1998.382810.87520000NSE
21-Sep-18DEWAN HOUSING INE202B07IK19.109-Sep-1998.426110.87515000NSE
21-Sep-18DEWAN HOUSING INE202B07JA0904-Jun-2398.69.3533300BSE
21-Sep-18DEWAN HOUSING INE202B07JI3004-Jun-2199.27239.0730000NSE
21-Sep-18DEWAN HOUSING INE202B0878510.7531-Dec-99102.3010BSE
Total All NCDs384814Lacs% DHFL/TOT21.13%Tot DHFL NCD81310Lacs
19-Sep-18DEWAN HOUSING INE202B07IO39.2509-Sep-2398.659.6158.98NSE
19-Sep-18DEWAN HOUSING INE202B07JA0904-Jun-2398.69.35283300BSE
19-Sep-18DEWAN HOUSING INE202B07JA0004-Jun-2397.389.6960NSE
19-Sep-18DEWAN HOUSING INE202B07JI3004-Jun-2199.55068.9410000NSE
19-Sep-18DEWAN HOUSING INE202B0878510.7531-Dec-99101.960110.3610NSE
Total All NCDs402498Lacs% DHFL/TOT3.36%Tot DHFL NCD13528.98Lacs
The table indicates date wise trading in DHFL NCDS starting from 19 sept 2018. 20th sept  was a trading holiday and on 21 sept, 2018 the rout in DHFL shares began at about noon, which is also reflected in highest volumes in the debt market at elevated yields on that day. The total trade in Secondary market on each day and the corresponding trade in DHFL NCDs along with Yield is indicated. This should be seen as a data series which will be updated for few more days to see emerging trends. Bit early to say but at this juncture the fear that had gripped DHFL NCD and overall Debt market has reduced at bit though Investors confidence in Corporate NCDs has been considerably shaken. 

Standard disclaimer:  I am not a SEBI registered analyst and above analysis is for educational purpose only. I may have vested interest in every stock I discuss and my views may be biased. Please do your own due diligence as stock market investments have high degree of inherent risk.