Mumbai: Moody’s Investors Service on Wednesday downgraded private lender Yes Bank’s foreign-currency issuer rating to ‘Ba3’ from ‘Ba1’, which sent the company’s stocks plunging nearly 7 percent on the BSE.
Moody’s also downgraded the bank’s long term foreign and local currency bank deposit ratings to ‘Ba3’ from ‘Ba1’, the foreign currency senior unsecured Medium Term Note (MTN) program rating to ‘(P)Ba3’ from ‘(P)Ba1’, and Baseline Credit Assessment (BCA) and adjusted BCA to ‘b1’ from ‘ba2’.
The rating downgrade took 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 its rating at its previous level.
Moreover, Moody’s expects the bulk of YB operating profits to get consumed by loan loss provisions over the next 12-18 months, and, thus, not support internal capital generation. This will leave the bank dependent on external capital. (IANS)