Moody’s places Yes Bank’s ratings under review, direction uncertain

Global rating agency Moody’s has once again placed ratings of Yes Bank under review due to uncertainty over its fund raising plans.

“Moody's Investors Service has today placed Yes Bank Ltd's long-term foreign currency issuer rating of B2 under review, with the direction uncertain,” it said in a statement, adding that it has placed the bank's long-term foreign and local currency bank deposit ratings of B2, and its foreign currency senior unsecured MTN program rating of (P)B2, under review, with the direction uncertain.

At the same time, Moody's has downgraded Yes Bank's Baseline Credit Assessment (BCA) and adjusted BCA to Caa2 from B3, it further said.

“Yes Bank’s deposit rating of B2 under review reflects Moody's expectation that the bank's standalone viability is getting increasingly challenged by its slowness in raising new capital,” the rating agency said, adding that the potential credit risk to the bank's senior creditors is uncertain, because there are a number of diverse scenarios that could affect the rating in either positive or negative directions.

Moody’s said the outlook of the ratings could change to stable or upgraded if the private sector lender concludes material capital raise that strengthens its equity capital ratio, after providing for the potential stressed assets, to a level in-line with other similarly rated Indian banking peers. Alternatively, it could be upgraded if the bank receives further government support that benefits its senior creditors and depositors.

It also warned that it could downgrade the bank's ratings if the bank is unable to secure a large capital increase within the review period, or its funding or liquidity deteriorates.

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