Mumbai:HDFC Mutual Fund has marked down the value of its schemes with exposure to the papers issued by Hazaribagh Ranchi Expressway (HREL) by another 12% after the issuer failed to make annuity payments, principal and net worth 52.7 crore as on April 14.This takes the total markdown in the security to 37% after a 25% markdown in the security in January 2019.
HREL is a special purpose vehicle (SPV) and a subsidiary of ILFS Transportation Network.Six debt schemes of HDFC Mutual Fund HDFC Short term debt fund, FMP1146D, credit-risk fund, hybrid debt, dynamic debt and banking and PSU debt fund cumulatively own HREL papers worth 232.5 crore.In a note to investors and distributors, HDFC Mutual Fund pointed out that the National Company Law Appellate Tribunal (NCLAT), vide its order dated February 11, 2019, had lifted the moratorium on international entities of ILFS as well as entities classified as Green.However, in the case of other entities, especially the Amber entities, NCLAT continues to hear arguments from the concerned lenders.As per the affidavits filed by ILFS, HREL has been classified as Amber category, which means that HREL is capable of servicing its secured obligations, ie the NCD issuance in which HDFC MF has invested.
However, the 13th annuity payment from NHAI scheduled on March15, 2019, has not been received yet due to operational delays by HREL.Such operational delays in receipt of annuity have also occurred in the past.
The delay in receipt of annuity does not hamper the capability of HREL servicing the payment obligation of Rs 52.7 crore due on April 14, 2019, with the available of approximately 83 crore in cash.
HDFC Mutual Fund continues to make legal representations at the NCLAT to lift the moratorium imposed on Amber companies so that the investors interest is protected.Of the HDFC Short Term Debt fund exposure of 49.5 crore face value (FV) to HREL, the principal amount of 12 crore was due on April 14, 2019.
In addition, all the above schemes were due to receive interest totalling to nearly 10 crore on the same day.