Yes Bank slips after Moody's rating downgrade

Yes Bank fell 3.78% to Rs 59.75 after Moody's downgraded the Bank's long term foreign currency issuer rating to B2 from Ba3.

Moody's Investors Service has also downgraded the bank's long-term foreign and local currency bank deposit ratings to B2 from Ba3, foreign currency senior unsecured MTN program rating to (P)B2 from (P)Ba3, and baseline credit assessment (BCA) and Adjusted BCA to b3 from b1. The announcement was made post trading hours yesterday, 5 December 2019.

Moody's assigned negative outlook on the bank's ratings.

The downgrade takes into account Moody's expectation that the bank's pool of potential stressed assets and low loss absorbing buffers against those assets will add pressure to its funding and liquidity, creating additional risks to its standalone credit profile or baseline credit assessment (BCA).

 

Moody's notes that Yes Bank has received offers from a number of financial investors to invest up to $2 billion through new equity capital into the bank. Nevertheless, Moody's notes that there are significant execution risks around the timing, price and regulatory approvals required.

The rating actions reflect Moody's view that Yes Bank's funding and liquidity compares weakly to other rated private sector peers in India, and could come under pressure, if the bank cannot strengthen its solvency in the next few quarters.

The negative outlook primarily reflects the risk of further deterioration in the bank's solvency, funding or liquidity, if the bank is unable to recapitalize itself within the next few quarters.

Yes bank is a private sector bank.

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