Money & Banking

Moody’s places YES Bank’s ratings under review

Our Bureau Mumbai | Updated on January 17, 2020 Published on January 17, 2020

Global rating agency Moody’s, on Friday, once again placed the ratings of YES Bank under review due to uncertainty over its fund-raising plans.

“Moody’s Investors Service has today placed YES Bank’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 programme 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 banking peers. Alternatively, it could be upgraded if the bank receives further government support that benefits its senior creditors and depositors.

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

The private sector has been trying to raise funds of about ₹10,000 crore through a mix of debt and equity to shore up its CET-1. It has called an extraordinary general meeting on February 7.

YES Bank scrip fell 1.75 per cent and closed at ₹39.25 apiece on the BSE.

Published on January 17, 2020
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