Moody's upgrades YES Bank to 'B3' after Rs 15,000 crore capital raise; outlook stable

Moody's has upgraded YES Bank's long-term foreign and local currency bank deposit ratings to B3 from Caa1, following its equity capital raise of Rs 15,000 crore. The private sector lender's long-term foreign and local currency bank deposit ratings have been revised to B3 from Caa1, and foreign currency senior unsecured MTN program ratings have also been upgraded to (P) B3 from (P) Caa1, Moody's Investors Service said in a statement on Monday. The outlook on the ratings, where applicable, has been changed to stable from positive.

"YES Bank's successful equity capital raise of Rs 15,000 crore (about $2 billion) has bolstered its solvency and is the main driver of the ratings upgrade.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," Moody's said.

YES Bank's follow-on public offer (FPO) to raise Rs 15,000 crore was subscribed 93 per cent on the final day of bidding. The bank had  targeted to raise Rs 15,000 crore with help from SBI Capital.

"Moody's also says, "as the bank's operations normalise the extraordinary government support will reduce. As a result, Moody's expects to lower support assumption in YES Bank's rating to moderate from high, as currently assumed, in line with the level assumed for Yes Bank's other Indian peers. A change in the support assumption to moderate may result in a one notch uplift to the bank's ratings."

Moody's also said that it expects it will be challenging for the bank to restore its low-cost current and savings account (CASA) deposits to pre-March 2020 rescue levels.Also read: Sovereign Gold Bond V Series opens for subscription: All you need to know

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