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 Rs 69 billion 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 12 billion rupees even after the Mumbai-based developer sold 28 per cent 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.
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