YES Bank to float Rs 1,000-cr of infra bonds in 2nd round

ICRA assigns rating of AA+ with a stable outlook to the planned float

YES Bank is going for a second round of infrastructure bonds to mop Rs 1,000 crore, for projects in transport and energy.

Its infrastructure portfolio has grown about fourfold in 33 months to Rs 10,387 crore in December 2014. Rating agency ICRA has assigned a rating of AA+ with a stable outlook to the planned float. It had the same rating for the earlier infra bond offering of Rs 1,000 crore and lower tier-II bonds of Rs 2,765 crore.

The ratings factor in YES Bank’s continued robust operating performance, with an ability to maintain sound asset quality indicators through cycles and ability to generate high levels of fee income.

Moderate, though steadily improving low-cost current and savings account (Casa) deposits, with increasing granularity, is also factored in. The rating takes in to account the equity mobilisation this financial year that further strengthens the capitalisation profile.

The credit strengths are partially offset by the relatively high share of corporate deposits funding (though declining steadily) and sluggish growth in Casa in the past few quarters.

The key rating sensitivities pertain to protecting the asset quality and successful scale-up of retail banking operations.

The bank’s customer assets were Rs 78,466 crore as on December 14 (up 23 per cent over a year), with net advances being Rs 66,607 crore and credit substitutes of Rs 11,859 crore. The bank continues to hold a well-diversified portfolio across sectors. The proportion of corporate and institutional clients in the overall credit portfolio was 68.7 per cent as on December-end.

Overall asset quality indicators were under control, with gross non-performing assets (NPAs at 0.42 per cent of the total and net NPA of 0.1 per cent, as on end-December. And, restructured assets being low at 0.26 per cent.

The Casa ratio was 22.6 per cent as on December, with year-on-year growth of 30.7 per cent. The overall capital adequacy of the bank under Basel-III norms was 16.7 per cent (tier-I at 11.8 per cent) on end-December,  compared to 14.4 per cent (tier-I at 9.8 per cent) as on end-March 2014.

Following the equity capital raising through a qualified institutional placement of $500 million (Rs 2,942 crore) in June 2014 at Rs 550 a share, the core equity capital  compares well with most other large private sector banks.