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They said Deutsche Bank made the purchases from local investors on behalf of overseas investors on the hunt for distressed assets. Deutsche Bank declined to comment on the matter.
“With the chances of the company’s revival having brightened to an extent, the level of discount is coming down,” said the head of debt capital market at a local financial services company.
Reliance Home Finance CEO Ravindra Sudhalkar said at a presentation two days ago that “98% of debenture holders would get their full payment,” an investor who was present cited him as saying. “The company CEO addressed investors and made a PowerPoint presentation, which in turn gave investors a bit of comfort,” the person said.
The discount narrowed to 70% in the latest transactions from 80% in trades that took place in November last year, dealers said.
Three deals took place on Monday and another three on Wednesday, each worth about Rs 90 crore. One deal of Rs 25 crore was sealed Thursday in unlisted bonds, dealers said. Reliance Capital was downgraded to ‘D’ or default on September 20 last year amid a liquidity crunch that has gripped nonbanking finance companies (NBFCs) for more than a year.
“The European bank has bought those papers because it will mostly sell those to its overseas clients, which are distressed asset buyers,” said an executive with the direct knowledge of the matter.
The weighted average price in the six deals on Monday and Wednesday was Rs 29.90 per Rs 100 face value. The latest deal on Thursday was at Rs 29.10.
“If you include the accrued interest into it, the deep discount will be marginally over 70%,” said a debt market dealer.
IDBI Trusteeship took Reliance Home Finance to the National Company Law Tribunal (NCLT), seeking to recover investments of Rs 3,500 crore after the Reliance Capital unit missed repayments, ET reported on January 10. It’s acting on behalf of about 20,000 bondholders.
The bankruptcy court, which heard the matter on Thursday, has given the company 10 days to respond.
Reliance Home Finance is said to be receiving cash flows of about Rs 150 crore every month. The company has informed investors of its latest financial status.
“The monthly inflows should benefit the efforts to revive the company,” said an investor who has about Rs 1 crore at stake.
The company is working on reaching an inter-creditor agreement with banks and is believed to have made a settlement offer to the consortium of lenders lead by Bank of Baroda that involves converting loans to equity.
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