Moody’s places YES Bank ratings under review for downgrade

In fresh trouble for private sector lender YES Bank, global rating agency Moody’s, on Wednesday, placed the bank’s foreign currency issuer rating of Ba3 under review for downgrade.

“The review for downgrade is driven by two factors – YES Bank’s weak financial performance in the quarter ended 30 September 2019...and the announcement by the bank that it had received a binding offer from a financial investor to invest up to $1.2 billion via new equity capital into the bank,” said Moody’s.

While the capital-raising will help improve YES Bank’s weak finances, Moody’s said there are significant execution risks around the timing, price and regulatory approvals required. “During the review period, Moody’s will focus on the bank’s ability to raise new equity capital,” it said.

On August 28, Moody’s had downgraded YES Bank’s long-term foreign-currency issuer rating rating and long-term foreign and local currency bank deposit ratings to Ba3 from Ba1, and had said the outlook is negative, wherever applicable.

In the latest statement, it said it has placed the bank’s long-term foreign and local currency bank deposit ratings of Ba3, foreign currency senior unsecured MTN programme rating of (P)Ba3, and Baseline Credit Assessment (BCA) and adjusted BCA of b1, long-term Counterparty Risk Assessment (CR Assessment) of Ba2(cr) and long-term domestic and foreign currency counterparty risk rating (CRR) of Ba2 under review for downgrade.

The private sector lender, which has been facing a challenging time in recent months, posted a net loss of ₹600 crore in the second quarter of the fiscal due to a one-time DTA provision of ₹709 crore for the lower corporate tax regime.

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