Dewan Housing Finance Corporation Ltd (DHFL) on Wednesday expressed concern over Icra’s downgrade of its commercial papers. The housing finance company said the “re-rating” was not merit-based and was unwarranted.

In a statement, DHFL said that Icra “chose to go ahead” with the rating action without considering the company’s intent of extinguishing the CP outstanding by the end of March — which was acknowledged by Icra in its press release.

A CP is an unsecured money market instrument issued in the form of a promissory note. It can have a minimum maturity period of seven days and a maximum of one year from the date of its issue.

Icra had downgraded the CPs of DHFL by two notches. It had said that the revision took into account the moderation in the company’s financial flexibility because of challenges faced in raising funds from banks and debt instruments and the resulting impact on its ability to generate fresh business.

“The company is surprised that Icra did not even consider DHFL’s steadfast commitment towards its obligations through sustained efforts, including asset sale and reduced CP exposure… Also, DHFL’s progress towards fundraising transactions was not taken into cognisance,” the company said in a statement issued on Wednesday.

Icra had revised its credit ratings for DHFL CP programme to “Icra A1+” (placed upon watch with negative implications) from ‘Icra A2+’ (under rating watch with negative implications).

DHFL chairman and managing director Kapil Wadhawan said he was surprised with Icra’s rating action, which was not at all merit-based.

“This comes barely three weeks after the company was downgraded and kept on watch by all the rating agencies. Since then, no material event has taken place which would have compelled the rating agency to review the ratings in less than a month’s time,” Wadhawan said.