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YES Bank tanks 10% on Moody's downgrade, negative outlook

Moody's downgraded YES Bank's long-term foreign currency issuer rating to B2 from Ba3.|
Updated: Dec 06, 2019, 03.47 PM IST
NEW DELHI: Shares of YES Bank dropped 10 per cent in Friday’s trade after Moody's Investors Service downgraded the private lender’s credit ratings, citing stressed assets and low loss-absorbing buffers against those assets. It also assigned a 'negative outlook' to the company.

Stressed assets related issues are seen adding pressure to funding and liquidity, creating additional risks to standalone credit profile of YES Bank.

Moody’s said its negative outlook primarily reflects the risk of further deterioration in the bank's solvency, funding or liquidity, if the bank is unable to recapitalise itself within the next few quarters.

It downgraded YES Bank's long-term foreign currency issuer rating to B2 from Ba3. It has also downgraded the 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.

The rating agency was of the view that YES Bank's common equity tier 1 ratio of 8.7 per cent at the end of September 2019 will come under significant pressure, unless the bank can raise new capital in the next few quarters.

The private sector lender last week said a number of investors have expressed interest in investing in the company and it is on course to raise $2 billion. Among those investors include Capital International, a part of the $1.87-trillion Capital Group based in the US, has committed to invest at least $120 million.

The shares of the lender closed 9.82 per cent lower at Rs 56 on BSE.

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