Yes Bank Shares Slide 10% Following Moody's Rating Downgrade

Yes Bank shares slid 10% in intra-day trade on Wednesday as ratings agency Moody's Investors Service downgraded the bank’s long-term foreign-currency issuer rating to ‘Ba3’ from ‘Ba1’.

The Yes Bank stock was trading at Rs 58.55, down 9.2%, on BSE at 2:44 pm, after hitting an intra-day low of Rs 58.05. The stock has corrected nearly 34% in the last one month and by a massive 84% in the last one year.

Moody’s has also downgraded the bank’s 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 from ba2.

Moody’s said the outlook on Yes Bank’s ratings is negative, which primarily reflects the risk of further deterioration in the bank’s solvency, funding or liquidity, as it continues to work through the asset quality issues and rebuilds its loss-absorbing buffers.

“The downgrade of Yes Bank’s ratings takes into account: the lower-than-expected amount of capital raised by the bank recently; and the risk that the substantial decline in the bank’s share price will challenge its ability to raise sufficient capital to maintain the rating at its previous level,” said Moody’s.

Meanwhile, Yes Bank informed stock exchanges on Tuesday that its board will be meeting on 30 August to consider raising funds by way of issuance of equity shares. The notification said: “ (The board will meet)...to consider and approve raising of funds by way of issuance of equity shares including but not limited through preferential issue and/ or Qualified Institutions Placement (QIP)/ Global Depository Receipts (GDRs)/ American Depository Receipts (ADRs)/ Foreign Currency Convertible Bonds (FCCBs)/ fully or partially convertible debentures/ convertible Preference shares/ any other financial instruments or securities convertible into Equity Shares or any other instrument on private placement basis.”

Yes Bank had recently raised Rs 1,930 crore through a QIP offer earlier this month. The bank allotted 231 million equity shares to eligible qualified institutional buyers at Rs 83.55 per share. Market analysts, however, said that the amount raised may not be enough to tide over the bank’s current liquidity crunch.