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YES Bank share price closes lower after CARE downgrades bank facilities, instruments

Ratings for infrastructure bonds worth Rs 5,000 crore have been revised to CARE A with negative outlook

twitter-logo BusinessToday.In        Last Updated: January 1, 2020  | 17:24 IST
YES Bank share price closes lower after CARE downgrades bank facilities, instruments
Lower Tier II Bonds worth Rs 2,530.60 crore were downgraded to CARE A from CARE A+ with negative outlook

YES Bank share price closed lower a day after CARE Ratings downgraded a series of bank's instruments and facilities. Share price of YES Bank fell nearly 1% intra day to Rs 46.55 compared to the previous close of Rs 46.95 on BSE. YES Bank stock has lost 8.79% in last five days. YES Bank share price has lost 74.63% in last one year. It has fallen 31.55% during the last one month.

It closed 0.64% lower at Rs 46.65 on BSE. On NSE, the stock ended 0.43% lower at Rs 46.75 against previous close of Rs 46.95.

Ratings for infrastructure bonds worth Rs 5,000 crore have been revised to CARE A with negative outlook. Lower Tier II Bonds worth Rs 2,530.60 crore were downgraded to CARE A from CARE A+ with negative outlook. Tier II Bonds (Basel III) worth Rs 8,900 crore have been assigned CARE BBB rating with negative outlook from the earlier CARE BBB+ rating.

Ratings for upper tier II bonds worth Rs 904.10 crore have been assigned CARE A- ratings with negative outlook from the earlier CARE A rating.

Perpetual bonds worth Rs 82 crore were assigned CARE A- rating with a negative outlook compared to CARE A rating.

Also read: Capital raise is just a matter of time, says YES Bank CEO Ravneet Gill

"The revision of ratings assigned to the debt instruments of YES Bank factors in more than expected delay in raising core equity capital," CARE Ratings said.

"There is continued uncertainty related to quantum and timelines of raising equity capital, which would keep the bank's capital buffers at low levels and provide lower cushion to absorb any losses on account of higher provisioning requirement due to weakening of asset quality," the ratings agency noted.

The private sector lender has been scouting for funds since its core equity capital is barely above the regulatory requirement of a minimum of 8 per cent. The lender needs to raise funds to provide for bad debts and expand lending.

On December 17 , YES Bank CEO Ravneet Gill said the lender was on track to raise the much-needed capital by the end of this month. On November 30, YES Bank in a filing to the bourses disclosed the list of potential investors willing to infuse funds into the bank.

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The bank mentioned entrepreneur Erwin Singh Braich/SPGP Holdings as a key investor with whom talks were ongoing and expected to be concluded shortly. Hong Kong-based SPGP Holdings/ Erwin Singh Braich committed nearly Rs 8,600 crore  ($1,200 million) to the bank.

Other parties who showed willingness for fund infusion, according to the bank, were Discovery Capital ($50mn), GMR Group and Associates ($50 mn), Rekha Jhunjhunwala ($25 mn), Aditya Birla Family Office ($25 mn) , Ward Ferry ($30 mn) and Citax Holdings Ltd and Citax Investment Group ($500 mn).

On December 2, the bank said that Capital International, part of the $1.87-trillion US-based Capital Group, has committed to invest at least $120 million in the private sector lender. On December 10, the lender after its board meeting said it would consider investment offer of $500 million from Citax Holdings and Citax Investment Group, adding that it would continue to evaluate other potential investors to raise capital up to $2 billion.

The private lender said that the binding offer of $1.2 billion submitted by SPGP Holdings and Canada's Erwin Singh Braich, which accounts for 60 per cent of its planned $2 billion capital raising, would "continue to be under discussion".

Its stock price fell up to 20% intra day to Rs 40.70 compared to the previous close of Rs 50.55 as the bank deferred the final decision regarding allotment of shares to next board meeting. The lender did not disclose the date of the meeting.

By Aseem Thapliyal

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