At 1.35 PM, Yes Bank shares were trading 14.79 per cent lower at Rs 15.55 apiece, as compared to a 0.65 per cent rise in S&P BSE Sensex
Private sector lender Yes Bank share price tumbled 20 per cent to hit a lower circuit at Rs 14.60 apiece on Thursday, even as global ratings agency Moody’s in its report said that the capital raising by the bank is credit positive. Since the private bank concluded its Rs 15,000 crore follow-on public offer (FPO), Yes Bank shares have been declining, taking its losing run to the fourth consecutive session. Yes Bank share price has tanked over 35 per cent from Friday’s close of Rs 19.80 apiece on BSE. On the last of day bidding, Yes Bank FPO was subscribed 93 per cent. The FPO had a price band of Rs 12-13 per share. “Successful equity raising reflects Yes Bank’s regained access to external market funds, which in turn shows its improving financial strength and will help support depositor confidence,” Moody’s said in its note.
At 1.35 PM, Yes Bank shares were trading 14.79 per cent lower at Rs 15.55 apiece, as compared to a 0.65 per cent rise in S&P BSE Sensex. “However, with the new capital, we expect the bank to be able to service the coupon of its tier II debt because its CAR, pro forma for the new capital raise, of 19 per cent is well above the regulatory capital requirements, thereby reducing risks to the bondholders,” the report said. Yes Bank aimed to raise capital to meet capital requirement needs at least for the next two years. A day before the FPO, the private lender raised Rs 4,500 crore from anchor investors.
The current market price of Yes Bank is not the true reflection of fundamentals given that the reconstruction scheme had locked in 75 per cent of all shares for 3 years, held by existing shareholders and new investors entering via the scheme. “We believe CMP will converge around FPO price, once FPO shares float in the market. However, on FPO there is no locked-in period for any investor,” said Jaikishan J Parmar, research analyst at Angel Broking last week.
Yes Bank informed that net proceeds will be utilised towards ensuring adequate capital to support its growth and expansion, including enhancing its solvency and capital adequacy ratio.