Housing finance companies have adequate liquidity: ICRA

                As housing finance companies raised approximately Rs 34,000 crore through debt market route and from National Housing Bank (NHB) during April and May 2020, it is expected that most of the HFCs will maintain an adequate liquidity profile for meeting their debt obligations even with lower collection levels (50-80%) in the portfolio, according to ICRA Ratings, a rating agency.

 

ICRA said that HFCs weighted average on balance sheet cash and liquid investments stood at about 7% of the AUM as on March 31, 2020 and at 12%, including the sanctioned funding lines.

 

The available liquidity is sufficient and could typically cover about two months of debt repayments of most HFCs, while access to the sanctioned funding lines could enhance the cover to three months.

 

Supreeta Nijjar, vice president, Financial Sector Ratings said, “Around 31% of the HFCs’ portfolio was under moratorium for 2-3 months as on April 30, 2020. Further most of the HFCs have not applied for a moratorium from their lenders.

 

While the HFCs in the affordable housing segment have a higher share of portfolio under moratorium owing to the relatively marginal borrower profile, which may have been impacted more during the lockdown, they are carrying adequate liquidity to service their debt obligations till August 2020”.

 

ICRA expects the inflows from advances not under moratorium to likely support the liquidity profile of HFCs. However, RBI’s extension of the moratorium till August 31, 2020 could lead to an increase in the share of portfolio under moratorium thereby reducing the liquidity cover.

 

Based on rating agency’s estimates, the total maturing debt for FY2021 is estimated to be Rs 2.9-3.2 lakh crore of which Rs 1.4 lakh crore is accounted by debt markets. Incremental funding requirement on this account would largely be met through refinancing by banks and primary issuances by HFCs in debt markets.


Source: ET Realty