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Published on 17/01/2020 3:39:28 PM | Source: Live Mint

Yes Bank slips nearly 7% after Moody`s places lender under review

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New Delhi : The shares of Yes Bank Ltd, on Friday fell nearly 7%, a day after ratings agency Moody’s Investors Service placed the lender’s ratings under review with the direction uncertain.

The shares of the private sector lender slumped 6.88%, lowest in the trading session so far, but later recovered to trade 2.8% lower at ₹38.85 apiece.

In last three months, the shares of Yes Bank have nosedived over 40%. There has been consistent delay in bank’s capital raising plan and uncertainty regarding the quantum, lower current account deposits.

Moody's placed Yes Bank's long-term foreign currency issuer rating of B2 under review, with the direction uncertain. The ratings agency also downgraded lender's Baseline Credit Assessment (BCA) and adjusted BCA to caa2 from b3. It further placed 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.

This is the second downgrade in 60-days. Moody’s on 5 December had downgraded Yes 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.

According to the ratings agency 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.

The private sector lender will seek shareholders’ nod to raise ₹10,000 crore via equity and debt at its Extraordinary General Meeting (EGM) scheduled on 7 February. Yes Bank will also seek shareholder’s nod to increase the authorized share capital from ₹800 crore to ₹1,100 crore at the EGM, as per a regulatory filing.

According to a Mint report, Yes Bank is recasting its capital-raising strategy, part of which involves abandoning its quest for big-ticket cheques in favour of relatively smaller and more frequent share sales. While the bank’s overall capital-raising target remains $2 billion, it now plans to raise the money in multiple tranches of around $400-500 million, the report says quoting sources privy to the development.

The change in Yes Bank’s strategy comes against the backdrop of the bank’s abrupt rejection of the $500 million investment offer made by Citax Holdings Ltd and Citax Investment Group. In November, the bank said Citax had evinced interest to invest $500 million in Yes Bank.