YES Bank turns volatile post QIP launch, plunges 9%

According to reports, the lender plans to raise Rs 2,000-3,000 crore through the QIP issue.

Shares of YES Bank turned volatile, falling 12 per cent from intra-day high on Friday, after the private sector lender announced opening of the qualified institutional placement (QIP) issue on Thursday.

YES Bank was down 9 to Rs 81.20 in intra-day trade, slipping 12 per cent from its early morning high of Rs 92.40 on the BSE. The stock opened 2 per cent higher at Rs 91 against Thursday’s close of Rs 89.15. At the time of writing this report, it was trading close to its 52-week low of Rs 79.50 touched on August 5, 2019.

At 02:42 PM, YES Bank was trading 7 per cent lower at Rs 82, as compared to a 0.74 per cent rise in the S&P BSE Sensex. The counter has seen huge trading volumes with a combined 168 million shares (representing 7 per cent of total equity) of YES Bank changing hands on the NSE and BSE so far.

The capital raising committee of the bank's board of directors on Thursday approved the floor price for the issue at Rs 87.90 per equity share and the committee may, at its discretion, offer a discount of not more than 5 per cent on the floor price, YES Bank said in a regulatory filing.

A committee will meet on August 14 to consider and approve the issue price and final discount, it added. According to reports, the lender plans to raise Rs 2,000-3,000 crore.

YES Bank intends to use the net proceeds for meeting bank’s capital requirements under Basel III norms, ensuring adequate capital to support growth and expansion, including enhancing its solvency and capital adequacy ratio, refinancing of Tier 1 and Tier 2 bonds.

Earlier this week, the global rating agency Moody's extended its review for downgrade of YES Bank’s Ba1 long-term foreign-currency issuer rating.

Moody's expects YES Bank will remain dependent on external capital raising to help maintain its capital level above the regulatory requirements. "Any inability of the bank to raise equity capital over the next 1-2 quarters will add significant pressure to its ratings. The review will also focus on developments in the watchlist portfolio, including the potential for resolution or slippage of some key exposures," it added.