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ADAG firm Reliance Home Finance misses NCD payment, extends maturity

Mumbai: Reliance Home Finance, an Anil Ambani company, has refinanced non-convertible debentures (NCDs) worth Rs 400 crore that had matured on Friday, but said it has paid the interest due on the same.

The instrument has now been extended by four months till October 31, 2019. The company said it has been done to address timing mismatch between receipt of proceeds from an ongoing asset monetisation to meet repayment requirements.

“In view of the continuing severe liquidity crisis in the sector, as now formally recognised even by RBI, the maturity of certain NCDs of Rs 400 crore has been extended till October 31, 2019, with formal written consent from the concerned debenture trustees and NCD holders,” an ADAG spokesperson said in an email.

He further said in view of the extension by mutual consent, there is no question of any default.

The NCD holder turned out to be Reliance Mutual Fund, which said a few schemes had maturities out of the investments in the NCDs of Reliance Home Finance to the tune of Rs 400 crore. While RHF has paid the interest that was due, the maturity of the said instruments has been extended till October 31 with additional cover and coupon.

The fund house said its schemes – Reliance Ulta Short Duration Fund and Reliance Credit Fund, Reliance Strategic Debt Fund – held the instrument and it has taken adequate measures to enhance security and safeguard investor interest. These provisions may or may not result in actual losses subject to the obligations being repaid in the future.

Meanwhile, Reliance Mutual Fund has further marked down Reliance Home Finance securities held by 19 other schemes, leading to near around 2 per cent impact on the next asset values of these schemes, which included Reliance Hybrid Bond Fund, Reliance Ultra Short Duration Fund, Reliance Credit Risk Fund, Reliance Equity Hybrid Fund, Reliance Strategic Debt Fund, Reliance Equity Savings Fund and Relaince Fixed Horizon Funds across series XXXI, XXXII, XXXIII and XXXIV. These instruments were earlier marked down as they were rated ‘C’ by ranting agencies.

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ADAG group last month exited the mutual fund business, selling its entire stake to its Japanese partner Nippon.

Over the past few weeks, rating agencies have revised credit ratings of certain debt instruments of Reliance Commercial Finance and Reliance Home Finance to ‘default’, or D, grade on concerns over the group’s deteriorating financial profile.

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