INSUBCONTINENT EXCLUSIVE:
By Saloni ShuklaInfrastructure Leasing Financial Services Ltd., an Indian shadow banker that defaulted on its commercial paper obligation
earlier this year, missed payments again on Friday.
The company, which helped fund India’s longest tunnel, defaulted on three
non-convertible notes series, it said in a filing to the stock exchange, without disclosing the value of the debt
It was also unable to meet an obligation for a letter of credit payable to IDBI Bank Ltd., the company said in a separate filing.
The
mounting troubles at ILFS have shaken confidence in the sector and rocked India’s stock markets on Friday
Investors jittery about the rare default in the nation’s money markets sold shares of financial companies
Dewan Housing Finance Corp
tumbled 43 per cent, while the benchmark SP BSE Sensex swung from a 1 per cent gain to a decline of as much as 3 per cent -- its wildest
intraday move in more than four years -- before closing with a 0.8 per cent loss.
ILFS’s outstanding debentures and commercial paper
accounted for 1 per cent and 2 per cent, respectively, of India’s domestic corporate debt market as of March 31, according to Moody’s
Its bank loans made up about 0.5 per cent to 0.7 per cent of banking system loans, Moody’s said.
Read more about why ILFS’ defaults are
worrying investors
The beleaguered company first defaulted on commercial paper, then on short-term borrowings known as inter-corporate
It has also failed to pay 4.5 billion rupees ($62 million) in ICDs to government-backed lender Small Industries Development Bank of India,
people familiar with the matter said earlier this month.
Separately, the company’s unit ILFS Financial Services Ltd
Managing Director Ramesh Bawa resigned, it said in a filing, without giving details
