Credit rating firms put DLF on negative 'rating watch'

Written by fe Bureau | Mumbai | Updated: Oct 19 2014, 06:32am hrs
DLFThe Sebi order will adversely impact DLF's ability to access the capital markets and constrain its financial flexibility, which has been one of its key rating strengths. (Reuters)
Credit rating firms have placed DLF's bank facilities and debt instruments on rating watch with negative implications, following the Securities and Exchange Board of India's (Sebi) October 10 order restraining the real estate major and some of its key executives from accessing the securities market, and from buying, selling or dealing in securities, directly or indirectly, for a period of three years.

The order is in relation to violation of Sebi regulations on disclosures with respect to its initial public offering (IPO). Crisil said, The Sebi order will adversely impact DLF's ability to access the capital markets and constrain its financial flexibility, which has been one of its key rating strengths. Crisil has long-term rating of CRISIL A and short-term rating of CRISIL A2+ on DLF's total bank loan facilities of Rs 15,730 crore, CRISIL A rating to R5,000 crore of NCDs and CRISIL A2+ to R3,000 crore of short-term debt.

Crisil said although more than 90% of the company's debt outstanding consists of bank loans and not contracted from the capital markets, the order will impact DLF's plans to raise funds through capital market instruments over the medium term such as equity, commercial mortgage-backed securities (CMBS) and real estate investment trusts (REITs).

Another credit rating agency, ICRA, also placed the long-term rating to over R4,000 crore NCD programme, R10,169 crore fund-based facilities and R1,160 crore non-fund based facilities of DLF, on rating watch with negative implications.