Moody’s keeps YES Bank ratings under review for downgrade

Global rating agency Moody’s, on Monday, kept YES Bank’s ratings under review for a downgrade, noting that the private sector lender has more than ₹10,000 crore of loans under a watchlist and ₹7,500 crore investment in bonds that have been downgraded.

“Based on management expectation, these watchlist loans could potentially translate into non-performing loans over the next two to three quarters,” Moody’s Investors Service said, adding that about 10 per cent of its total investment holdings have experienced rating downgrades in the past quarters.

“Moody’s expects YES Bank will remain dependent on external capital raising to help maintain its capital level above the regulatory requirements,” it said, adding that during the review period, it will try to get more clarity on the bank’s ability to raise new capital and also sufficiency of the capital raised against the asset quality stress.

“Any inability of the bank to raise equity capital over the next one to two quarters will add significant pressure to its ratings,” Moody’s warned.

The private sector lender plans to raise about $1.2 billion, at least part of which is likely by the end of the second quarter.

YES Bank had posted ₹114-crore profit in the first quarter of the fiscal, with gross non-performing assets at 5.01 per cent.

Following the results, rating agency ICRA had downgraded the long-term ratings of YES Bank, and has maintained the negative outlook with concerns over high stressed assets and weakening of CET-1.

Moody’s had, on July 11, placed YES Bank under review for a downgrade, reflecting its concerns that the ongoing liquidity pressures in NBFCs will negatively impact the bank’s credit profile, given íts sizeable exposure to weaker companies in the sector.

The YES Bank scrip fell 8.15 per cent and closed at ₹81.10 apiece on the BSE.

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