Challenges to paying debt obligations amid a slump in apartment sales might force developers to sell assets, wherein lenders may face haircuts and exposure losses, India Ratings analysts, said earlier this month in a note. The dim outlook is reflected in the bond market, where dollar notes of property tycoon Mangal Prabhat Lodha have slumped amid weak liquidity and refinancing risks.
“There are pre-sanctioned limits on our projects, but disbursal is not happening according to the committed amount,” said Parth Mehta, managing director at Paradigm Realty, a Mumbai-based mid-sized developer. Decision-making at lenders is taking long with negotiation time doubling to 90 days, he said.
There’s hope that measures proposed in the Budget on July 5, including lenders offering a partial credit guarantee for the purchase of high-rated pooled assets of sound non-bank finance companies, would help ease the cash crunch, Mehta said.