INSUBCONTINENT EXCLUSIVE:
By Rahul Satija and Dhwani PandyaIndia’s property tycoon Mangal Prabhat Lodha’s company just can’t catch a break in the bond market as
liquidity risk has roared back amid stress in the sector.
Lodha Developers International Ltd.’s 2020 dollar-denominated notes have fallen
to a record low this month, according to Bloomberg prices going back to August 2016
That reflects deepening problems in the country’s real-estate sector which is facing a funding crunch on top of lackluster home sales,
climbing inventories and declining prices.
The developer’s 12% notes have slumped more than 14 cents to 82.9 cents on the dollar since May
2, when Moody’s Investors Service revised parent company Lodha Developers Ltd.’s outlook to negative, citing weakening liquidity
Fitch Ratings also changed its outlook to negative last month.
The debt problems may rein in founder Lodha’s attempts to take his company
public and hurt his leading position in the South Asian nation’s real-estate market
His wealth was estimated at about 271.5 billion rupees ($3.91 billion), according to the GROHE Hurun India Real Estate Rich List released
last year, making him India’s richest developer at the time.
There was no immediate reply from Lodha Developers to an emailed request for
comment.
Indian property companies, which have been increasingly relying on shadow banks for borrowing, are struggling to roll over debt as
the lenders themselves are facing a cash squeeze, raising prospects of a wave of defaults
The problems have worsened in recent weeks as non-bank financier Dewan Housing Finance Corp
had its rating cut to default.
Lodha Developers’ cash and operating cash flow will be “insufficient” to meet 69 billion rupees of debt
repayments due this financial year, Fitch wrote in its May note
“A failure to execute its refinancing plan may result in the rating being downgraded by one or more notches.”
The real-estate company is
developing the Trump Tower in India’s commercial capital Mumbai.
Shadow lender Piramal Capital - Housing Finance Ltd
said last month that it planned to cut its exposure to Lodha Developers by Rs 1,200 crore even after the Mumbai-based developer sold 28% of
its London arm earlier this year to pare debt and planned further stake sale
The firm is also trying to monetize projects in India to meet refinancing needs.
