Moody’s downgrades Yes Bank, outlook negative

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Published: December 6, 2019 2:03:35 AM

The rating agency also stated the outlook on the bank’s ratings, where applicable, is negative.

Moodys, Yes Bank, Yes Bank common equity tier 1,  stressed assets, equity capital, MTN programme ratingIn its rating rationale the rating agency said, “Moody’s expects Yes Bank’s common equity tier 1 (CET1) ratio of 8.7% at the end of September 2019 to come under significant pressure, unless the bank can raise new capital in the next few quarters.

Moody’s Investor Service on Thursday downgraded Yes Bank’s long-term foreign currency issuer rating to ‘B2’ from ‘Ba3’. It also downgraded the bank’s long-term foreign and local currency bank deposit ratings to ‘B2’ from ‘Ba3’, foreign currency senior unsecured MTN programme rating to ‘(P)B2’ from ‘(P)Ba3’, and Baseline Credit Assessment (BCA) and adjusted BCA to ‘b3’ from ‘b1’.

The rating agency also stated the outlook on the bank’s ratings, where applicable, is negative. The downgrade of Yes Bank’s deposit and senior unsecured programme ratings to ‘B2’ from ‘Ba3’ and ‘(P)B2’ from ‘(P)Ba3’ 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 BCA.

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

In its rating rationale the rating agency said, “Moody’s expects Yes Bank’s common equity tier 1 (CET1) ratio of 8.7% at the end of September 2019 to come under significant pressure, unless the bank can raise new capital in the next few quarters. 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.”

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