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Moody's downgrades YES Bank rating; outlook negative

Moody's said lender’s stressed assets related issues will add pressure to its funding and liquidity.

ETMarkets.com|
Dec 05, 2019, 04.47 PM IST
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NEW DELHI: Moody's Investors Service downgraded YES Bank’s credit ratings due to stressed assets and low loss absorbing buffers against those assets. It also assigned a negative outlook to the company.

The 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.

The rating agency said lender’s stressed assets related issues will add pressure to its funding and liquidity, creating additional risks to its standalone credit profile.

Moody's downgraded Yes Bank Limited'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.

It added 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 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. But, Moody's notes that there are significant execution risks around the timing, price and regulatory approvals required.

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