In an extremely volatile session, DHFL shares crashed by more than 60% intra-day and it was only after the management’s reassurance about sufficient liquidity that the stock finally recovered nearly 24% from day’s low of Rs 274. Even as the sudden crash caused panic in the markets, DSP MF said that the house has sold DHFL paper worth Rs 300 crore in the past few days to capitalise on the interest rate fluctuations. “For the last few days, envisaging tightness in money market liquidity, and the fact that we are in September with advance tax outflows, we have just tried to keep higher cash levels to capitalise on interest rates fluctuation In all our bond funds, we are on the lower band of our average maturity; so we have just reduced maturity by reducing exposure to multiple papers,” Kalpen Parekh, President, DSP MF told in an interview to CNBC TV18.
No concerns about DHFL management, says DSP MF
Notably, DSP MF has denied having any concerns about the DHFL management, and their own internal liquidity or redemption pressures. “We have no problem of liquidity whatsoever; this is because of our maturity profile, because interest rates are going up, because of which we would like to come down in our maturity period as such; we have been doing it for the last six months,” Hemendra Kothari said. The company’s management pointed out that their fixed income portfolio is worth Rs 55,000 crore, while the paper sold amounts to just Rs 300 crore. “We have not sold more that Rs 300 crore; that is the total figure that has been sold. We have nothing against the company (DHFL) at all; we have nothing against the management angle or any other aspect at the moment, nor we have got any report; we are just reducing our maturity period; that’s all that we are looking at at the moment,” Kothari told the channel.
DSP MF disclosed that the house has exposure of Rs 350 crore to the recently downgraded IL&FS bonds, and over 50% of the total value has already been marked down. IL&FS loans and bonds were recently downgraded by rating agency ICRA, and many debt mutual funds are seen to bear the brunt. The rating agency has downgraded IL&FS bonds and long term loans to BB from AA+, a fall of 9 notches from investment grade to junk status. “In all our funds we have enough liquidity lying just now; regarding IL&FS, we have got some exposure, and that exposure we have done ‘mark-to-market’, so which has already been gone and over with; 50% has been marked down, and that has been shown in our NAV,” Hemendra Kothari explained.
No Indiabulls papers sold by DSP MF
While even Indiabulls Housing Finance shares plunged by as much as 55% intra-day, DSP MF said that they have not sold any paper of the firm. Further, the firm added that it has reduced the average maturity in the bonds’ portfolio by reducing exposure to multiple papers.