Ind-Ra downgrades YES Bank on inadequate equity infusion; places on RWN

India Ratings and Research (Ind-Ra) has downgraded YES Bank’s Long-Term Issuer Rating from “A+” to “A”, because of inadequate and slow equity infusion. 

The fresh capital is critical for providing sufficient cushion for the credit cost impact of its stressed asset pool. Ind-Ra has considered equity infusion of $1.0-1.2 billion in the next few weeks.

In a similar move, ICRA has downgraded rating on YES Bank’s tier-II bonds from “A+” to “A”.  The downgrade is on the basis of continued uncertainty regarding the timing and extent of capital raise. 

The level of investor interest, amid correction in the stock and receipt of regulatory approvals, also remains a key monitorable, ICRA added. The YES Bank stock closed 6.7 per cent higher at Rs 49.9 on the BSE.

It’s Short-Term Issuer Rating has been downgraded to “A1” from “A1+”. The ratings have been placed on Rating Watch Negative (RWN), reflecting the dependency of the rating level on the timing and extent of equity raise.

The liquidity position of the lender seemed adequate at the end of September. However, in the absence of improvement on the capital side, the ability to manage maturities of its assets and liabilities might be tested further, the rating agency said in a statement.