Dewan Housing’s Stock, Debt Paper Tumble On Report Of Probe

Shares and debt paper of Dewan Housing Finance Ltd. tumbled today after a report said that the government is examining its accounts following investigative news website Cobrapost’s allegations of financial irregularities..

Thinly traded listed non-convertible debentures had fallen between 4.87 percent and 13.15 percent at 1:45 p.m. today, according to exchange data. That pushed up effective yields on the NCDs, rated ‘AAA’ by Brickworks. The instruments are quoting 14-32 percent lower than the face value of Rs 1,000.

Shares of the lender also plunged as much as 14 percent, the most in about three months, after Reuters reported that the Ministry of Corporate affairs will probe allegations against the housing finance company. It has denied any wrongdoing even as the stock has fallen more than 37 percent since Jan. 25.

This is the second time in four months that the mortgage lender is battling investor fears. In September, its shares had plunged as much as 60 percent in a day after DSP Mutual Fund sold its AAA-rated commercial paper at a higher yield, triggering fears of a contagion from the defaults of IL&FS group. The crisis at the infrastructure finance company led to a credit crunch for non-bank lenders.

Market borrowings, including NCDs, contribute nearly half of outstanding debt for Dewan Housing Finance as of December, according to its filings. It repaid NCDs worth Rs 1,657 crore between Sept. 24 and Dec. 31. The company also raised Rs 2,750 crore through such instruments during the period.