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Home / Finance / News / CARE upgrades rating for YES Bank's tier-II, infra bonds to "BBB+"
CARE upgrades rating for YES Bank's tier-II, infra bonds to "BBB+"
The CARE ratings continue to factor in the improvement in the credit profile of the bank post the implementation of the reconstruction scheme for the private sector lender.
Rating agency CARE has upgraded the rating for YES Bank’s tier-II bonds and infrastructure bonds from “BBB” to “BBB+” on stabilisation of operations, growth in business and continued improvement in profitability.
The ratings continue to factor in the improvement in the credit profile of the bank post the implementation of the reconstruction scheme for the private sector lender, CARE said in a statement.
In March 2020, Reserve Bank of India, with approval from the government, crafted a reconstruction scheme to protect depositors’ money, provide capital support, liquidity support and reconstitute the Board for better governance. The bank reported CAR of 17.74 per cent with CET I Ratio of 11.63 per cent as on December 31, 2021.
There has been steady growth in the deposit base including in current asset and savings account deposits of the bank. There is a shift towards retail lending and granularization of advances profile and improvement in liquidity profile of the bank.
However, the ratings continue to remain constrained on account of weak asset quality parameters. There is concentrated exposure to certain stressed corporate groups and bank witnessed slippages in the retail and MSME advances on account Covid-19 induced lockdowns.
CARE said Basel III compliant tier-II Bonds are characterised by a Point of Non-Viability (PONV) trigger due to which the investor may suffer a loss of principal. PONV is a point at which any bank may no longer remain a going concern on its own unless steps are taken to revive operations and to continue it as a going concern. The Reserve Bank of India will determine PONV.
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