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In a thumbs up to the recent capital-raise by YES Bank, Moody’s Investor Service said it will strengthen the private sector lender’s capital and reduce risks for creditors.
“The capital-raise is credit positive because it strengthens the bank’s capitalisation and loss-absorbing buffers and will reduce default risk for its creditors,” it said in a statement on Tuesday.
Further, the successful equity raise reflects the bank’s regained access to external market funds, which, in turn, shows its improving financial strength and will help support depositor confidence, it noted.
“The capital-raise brings YES Bank’s capitalisation closer to its private sector peers and will strengthen the bank’s resilience to potential asset quality stress because of Covid-related disruptions to India’s economy,” it further said.
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YES Bank FPO sails through with 95% subscription
QIB portion oversubscribed with investments from SBI, LICThe agency estimates that the new capital from the equity raise will nearly double the bank’s Common Equity Tier 1 (CET1) ratio to 12.9 per cent from 6.3 per cent as on March 31, 2020.
It also expects that the bank will be able to service the coupon of its Tier II debt because its CARfor the new capital raise of 19 per cent will be well above the regulatory capital requirements, reducing risks to the holders of its Tier II debt.
YES Bank has been able to raise close to ₹15,000 crore capital from an FPO last week. The issue was subscribed 95 per cent.
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