YES Bank stock price fell over 5% in early trade on Friday after Moody's Investors Service downgraded the private lender's credit ratings and assigned a 'negative outlook' to the company. The downgrade comes ahead of lenders' fundraising plans by various investors.
Moody's cited stressed assets and low loss-absorbing buffers against those assets for the downgrade, which may add pressure to its funding and liquidity.
Reacting to the development, YES Bank stock was the top loser in early trade after it started 1.7% lower at Rs 61. Later, share of YES Bank declined as much as 5.31% to touch an intraday low of Rs 58.60 apiece, against the previous closing value of Rs 62.10.
In terms of volume, 50.6 lakh and 734 lakh shares were changing hands on BSE and NSE, respectively. Market depth data suggested 56% selling against 44% buying.
YES Bank shares trade higher than 50-day moving averages but lower than 5, 20, 100 and 200-day moving averages. The stock has fallen 4.2% in the last 2 days. The stock has fallen 13% in a month and 67% on a year-to-date basis.
Moody's has downgraded YES Bank 's long-term foreign and local currency bank deposit ratings to B2 from Ba3, foreign currency senior unsecured MTN program rating to (P)B2 from (P)Ba3, and Baseline Credit Assessment (BCA) and Adjusted BCA to b3 from b1.
The negative outlook primarily reflects the risk of further deterioration in YES Bank's solvency, funding or liquidity, if the bank is unable to recapitalise itself within the next few quarters, says Moody's.
On YES Bank's fundraising plan, the rating agency said the bank's claim to have received investor interest to the tune of $2 billion has "significant execution risks around the timing, price and regulatory approvals".
The downgrade of YES Bank's deposit and senior unsecured program ratings were attributed to the bank's pool of potential stressed assets and low loss-absorbing buffers against those assets, which may add pressure to its funding and liquidity, creating additional risks to its standalone credit profile.Top stocks to watch: YES Bank, Vodafone Idea, Bharti Airtel, Mahindra & Mahindra, Bank of Baroda and others