YES Bank share price falls 6% as Ind-Ra maintains negative rating for lender

YES Bank share price declined nearly 6% in early trade on Thursday after credit rating agency India Ratings & Research maintained lender's long-term issuer rating of 'IND A' on Rating Watch Negative (RWN), citing extension of timeline for proposed equity infusion. The agency has withdrawn the bank's short-term rating since there is no outstanding against the same.

Following the credit rating update, YES Bank share price hit an intraday low of Rs 38.75, declining 5.9% on BSE. Volume-wise, 30 lakh and 607 lakh shares were trading on BSE and NSE, respectively. Market depth data suggests 60% sellers offering the stock against 40% buyers bidding. Market cap of the private sector lender stood at Rs 10,074 crore on BSE

Share price of Mumbai-based bank has fallen over 3% in a week, 16% in a month and 80% in a year. YES Bank stock price is trading lower than its 5, 20, 50, 100 and 200-day moving averages.

The brokerage house said the follow-up rating action is on the back of absence of any swift equity raising, which is critical for providing sufficient cushion to the possible credit cost impact from the stressed asset pool on the regulatory capital requirement in the short- and medium-term. The rating would be reviewed again in February.

Liquidity position of the bank seemed adequate at end-September 2019 (liquidity coverage ratio of 114%), it added.

The credit rating firm said the lender had initially planned to raise capital of over $1.2 billion in FY20. Although the bank had announced plans of raising $2 billion of equity, its board had rejected the binding term sheets of $1.2 billion offered by Canadian investor SPGP Group/Erwin Singh Braich. Furthermore, the decision to consider the binding term sheet of $500 million by Citax Investment Group is yet to be favourably finalised by the board, the agency added.

RWN status indicates that the rating will be either affirmed or downgraded, which would be resolved depending on the quantum and the timing of equity infusion, India Ratings added.

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