New Delhi, May 13 (IANS): Ratings agency Crisil has downgraded the rating of Dewan Housing Finance Corporation's (DHFL) commercial papers worth Rs 850 crore to "A4+" due to a more-than-expected reduction in the company's liquidity.

The previous rating of the company was "A3+", a statement by the rating agency said on Monday.

The rating continues on "rating watch with negative implications", it added.

"The downgrade is driven by more-than-expected reduction in the company's liquidity because of further delays in fund raising from sell down of project finance loans and lower inflows from securitisation of non-housing loans," it said.

Crisil noted that DHFL, as a strategic decision, did not resort to securitisation of readily available housing loans to prop up the liquidity levels.

"Crisil also notes higher-than-scheduled liability repayments. Crisil believes there is heightened additional risk of unscheduled early redemption of NCDs. On the other hand, there is low visibility regarding timely fund raising," it said.

Consequently, DHFL's liquidity levels are expected to remain low with reduced cushion or buffer for upcoming cash outflow and with liquidity weaker than previously envisaged, sensitivity of timely receipt of funds from various initiatives has increased significantly, said Crisil.

Liquidity of DHDL dropped to Rs 2,775 crore as on April 30, 2019, including statutory liquidity ratio (SLR).

On the other hand, scheduled aggregate cash outflows, including loan repayment and securitisation payouts, till July 2019, remain high, estimated at Rs 8,400 crore, Crisil said.

It, however, also said that DHFL's management continues to focus on induction of a strategic investor and securitisation of non-housing loan exposures and the initiatives remain critical for restoring market confidence, which will help build resource-raising ability.