Moody’s puts Yes Bank ratings under review; lowers credit assessment

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Published: January 17, 2020 1:34:56 AM

The placing of Yes Bank’s deposit rating of B2 under review reflects Moody’s expectation that the bank’s standalone viability is getting increasingly challenged by its slowness in raising new capital.

yes bank, moodyThe placing of Yes Bank’s deposit rating of B2 under review reflects Moody’s expectation that the bank’s standalone viability is getting increasingly challenged by its slowness in raising new capital.

Moody’s Investors Service on Thursday placed Yes Bank’s long-term foreign currency issuer rating of B2 under review, with the direction uncertain.

The ratings agency also placed the bank’s long-term foreign and local currency bank deposit ratings of B2, and its foreign currency senior unsecured MTN program rating of (P)B2, under review, with the direction uncertain.
Moody’s also downgraded Yes Bank’s baseline credit assessment (BCA) and adjusted BCA to CAA2 from B3.

The placing of Yes Bank’s deposit rating of B2 under review reflects Moody’s expectation that the bank’s standalone viability is getting increasingly challenged by its slowness in raising new capital. Moody’s points out that the potential credit risk to the bank’s senior creditors is uncertain, because there are a number of diverse scenarios that could affect the rating in either positive or negative directions. Moody’s said because the viability of the bank absent a large capital injection is in question, Moody’s has downgraded the bank’s standalone credit profile or its BCA to CAA2 from B3.

“Yes Bank is in discussions with a number of investors to raise new equity capital, which would be credit positive if executed successfully. If the bank successfully recapitalises and repairs and cleans its balance sheet, its ratings could stabilise or face upward pressure”, Moody’s said.

If a private sector solution is unsuccessful, and a regulatory led resolution is implemented, Moody’s expects that the Indian authorities will strive to maintain systemic stability and avoid losses to depositors and senior creditors.

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