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How EPFO plans to redeem half of its DHFL bonds

Mumbai: The Employees' Provident Fund Organisation (EPF..

Mumbai: The Employees' Provident Fund Organisation (EPFO) has sought details of its cash-generation plans from Dewan Housing Finance Ltd (DHFL), as the retirement fund manager has sought to redeem half its investment in the home financiers bonds before maturity.

The companys management met members of the EPFOs Central Board of Trustees last week in New Delhi, briefing the country's largest institutional debt investor about its asset monetisation plans and promising to make structured repayments in a timely manner, said two people familiar with the matter. The retirement body is expecting the money to arrive this week.

"We have asked for part redemption of DHFL bonds … as the company senior management met us last week," Prabhakar Banasure, a member of the Central Board of Trustees, told ET. “The company is expected to honour it this week. At EPFO we are optimistic about the company's monetisation plans."

State-managed EPFO had invested about Rs 1,300 crore in DHFL bonds about five years ago through private deals. These securities have a put option after five years, which enables the investor to surrender the bonds now. It should be invoking this provision, one of the two people said.

DHFL didnt respond until press time Monday to an email seeking comment.

The home financier has already paid Rs 52 crore of interest due on the bonds subscribed by the EPFO.

At the time the EPFO made the investment in 2014-15, the companys debt was rated AAA by CARE. As per rules, EPFO cannot invest in any debt securities rated below AA+. But, pension and insurance funds like EPFO do not have the compulsion of showing any mark-to-market losses in sync with changing market prices.

A few weeks ago, the same ratings firm downgraded the companys debt to D, or the default category, citing a delay in the payment of interest totalling nearly Rs 1,000 crore.

The housing finance company paid the interest within seven days of the due date, raising cash by selling loan portfolios and shares in a group company.

DHFL is in discussion with some private equity funds to dilute promoteRead More – Source
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