HYDERABAD: In a further setback to Yes Bank, Moody’s Investors Service downgraded the lender’s long-term foreign-currency issuer rating on Wednesday.
According to the global rating agency, Yes Bank’s lower-than-expected capital raised and a steady and steep fall in its stock price limit the bank’s ability to raise more capital to maintain the rating at its previous level.
Yes Bank scrip plunged over 85 per cent so far this year largely due to deepening asset quality concerns.
Last month, the bank raised about USD 270 million via QIP, and has chalked out plans to raise another USD 600 million to strengthen its capital base. Its board will meet Friday to deliberate on the same.
Yes Bank’s foreign currency issuer rating was downgraded to Ba3 from Ba1; long-term foreign and local currency bank deposit ratings to Ba3 from Ba1; foreign currency senior unsecured MTN program rating to (P)Ba3 from (P)Ba1; and Baseline Credit Assessment (BCA) and adjusted BCA to b1 to ba2.
According to Moody’s, the outlook on the Yes Bank’s ratings, wherever applicable, was negative and primarily reflects the risk of further deterioration in its solvency, funding or liquidity.
It also expects the bulk of Yes Bank’s operating profits to get consumed by provisions in the next 12-18 months.
“This will leave the bank dependent on external capital raising to improve its loss-absorbing buffers, which in Moody’s opinion is becoming more challenging given the substantial decline in its share price,” Moody’s noted.
The bank’s gross NPAs ratio rose from 3.2 per cent in Q4FY19 to 5 per cent in Q1FY20. Worryingly, another Rs 10,000 crore worth loans are in the watchlist and could slip into the NPA pile in next few quarters. Earlier, about Rs 7,500 crore bond investments had seen rating downgrades.