Clearwater-backed lender’s default adds to India’s woes

Bloomberg

Another shadow financier in India has defaulted on a debt repayment, signaling the nation’s yearlong credit crisis is far from abating.
Altico Capital India Ltd, a non-banking finance company that focusses on lending to the real-estate sector, didn’t pay 199.7 million rupees ($2.8 million) of interest on borrowings from Dubai-based Mashreqbank PSC, Altico said in an exchange filing.
The company’s failure to repay “may result in an acceleration of interest repayment, redemption obligations in respect of non-convertible debt securities issued by us and may trigger a default in their timely repayments,” according to Altico’s statement. “We are evaluating options for resolving the liquidity crisis and will be engaging in discussions with various stakeholders for the same.”
Altico’s default puts a spotlight on India’s property sector, that has been one of the main recipients of funding from shadow lenders, which are struggling to survive a liquidity crunch. Moody’s Investors Service said earlier this month that a pullback in lending by non-bank lenders against property may result in defaults at small- and medium-sized enterprises.
India’s year-old credit woes began after the shock default by the Infrastructure Leasing & Financial Services Ltd in 2018, creating a challenge for many mortgage lenders, which are now struggling to roll over debt. Altico defaulted on September 12 on a six-year loan.

Debt Trouble
A spokeswoman for Altico wasn’t immediately able to comment. Altico’s shareholders include Clearwater Capital Partners, Abu Dhabi Investment Council and Varde Partners, according to Altico’s website.
India Ratings downgraded the financier’s debt to A+ from AA-, with a negative outlook. That same day, Altico’s Chairman Naina Lal Kidwai stepped down, Altico said in a separate statement.
The company has 43.62 billion rupees of loans outstanding from banks and financial institutions, according to its
latest filing.
Altico’s default is because of an asset-liability mismatch “created on account of the rating downgrade,” which triggered creditors to call in their borrowings, UTI Asset Management Co, which has invested in the lender’s debt, said in a statement.
UTI has separated 2.02 billion rupees of its investment in Altico from one of its fund, according to the statement. Reliance Nippon Life Asset Management Ltd, which has about 2 billion rupees of exposure to Altico, has also decided to segregate its investment in the company, according to a person familiar with the matter, who asked not to be identified.
Care Ratings slashed its outlook on the company 11 levels to B from AA- after the default.