Mumbai: India’s biggest mortgage lender, Housing Development Finance Corp. Ltd (HDFC), has limited exposure to yen-denominated loans and concerns about losses because of the dollar’s slide are overblown, Morgan Stanley said.
“HDFC has one yen-denominated loan outstanding of $100 million (Rs406 crore), which is maturing over the next few days,” analysts Anil Agarwal, Ashish Jain and Mansi Shah wrote in a note on Tuesday.
They said HDFC had provisioned for Rs16 crore on mark-to-market loss in the December quarter, and would not impact March quarter results. It also has a $400-450 million exposure in rupee debt swaps for Japanese yen loans, they added.
Indian companies and banks raised yen loans or swapped rupee debt, attracted by near-zero interest costs in Japan, compared with 10-11% in India. The dollar’s plunge to a 13-year low against the yen, however, raises the cost of repayment for borrowers. HDFC would be hurt if the yen strengthened beyond 85 to the dollar, they said and added that level was unlikely.