Moody’s upgrades Yes Bank from “Caa1” to “B3” on Rs 15,000 crore fundraising

YES Bank shares gained 3.5 per cent to quote at Rs 12.41 on the BSE on Tuesday soon after global agency Moody’s upgraded YES Bank’s long-term foreign-currency issuer rating from “Caa1” to “B3” on equity capital raise of Rs 15,000 crore.

The bank’s long-term foreign and local currency bank deposit ratings have been upgraded by Moody to “B3” from “Caa1”, and foreign currency senior unsecured MTN programme rating to (P)B3 from (P)Caa1.

According to the rating agency “The outlook on YES Bank’s ratings, where applicable, has been changed to stable from positive. The successful equity raising showcases YES Bank’s regained access to external market funds, which is a result of its improving financial strength and will support depositor confidence”.
The private sector bank had raised Rs 15,000 crore through FPO. The bank issued shares at a price of Rs 12 per share. Over 12.5 billion new shares issued in the FPO commenced trading last week.

YES Bank FPO had managed to get 95 per cent subscription, driven by institutional investors, even as high net worth individuals (HNIs) and retail investors showed tepid interest in the bank’s offering. While the qualified institutional buyers (QIB) portion was subscribed 1.4 times, the segments meant for HNIs and retail buyers were subscribed just 63 per cent and 43 per cent, respectively.

In the second quarter of 2020, YES Bank’s funding and liquidity have moderately improved, although they are still weaker than a year ago. The bank continues to face the risk of a further deterioration in asset quality in light of the ongoing economic disruption caused by the coronavirus outbreak, the Moody’s report said.