YES Bank AT1 bond write-down reflects distinct treatment for private banks

Rating agency Standard and Poor’s on Monday said the decision to write-down YES Bank’s additional tier-1 (AT1) bonds highlights the distinction in India in treatment of instruments issued by public sector banks and those from private banks.

This would create losses for asset managers and raise capital costs for issuers. A complete write-down would likely raise the risk premium that investors price into Indian hybrids, said S&P Global Ratings credit analyst Deepali Chhabria.

The bailout scheme requires YES Bank to write down about Rs 8,700 crore ($1.2 billion) of outstanding AT1s.

AT1 investors have filed a petition in court against